MERCHANDISING 


THE  MACMILLAN  COMPANY 

MXW  YORK  •   BOSTON  •   CHICAGO  •  DALLAS 
ATLANTA   •   SAN  FRANCISCO 

MACMILLAN  &  CO.,  LOOTED 

LONDON   •  BOMBAY   •  CALCUTTA 
MELBOURNE 

THE  MACMILLAN  CO.  OF  CANADA,  LTD. 

TORONTO 


MERCHANDISING 


BY 
ARCHER  WALL  DOUGLAS 

CHAIKMAN,  COMMITTEE  ON  STATISTICS  OF  THE  UNITED 
STATES  CHAMBER  OF  COMMERCE 


fork 
THE  MACMILLAN  COMPANY 

1918 

All  rights  reserved 


COPYRIGHT,  1918 

BY  THE  MACMILLAN  COMPANY 
Set  up  and  electrotyped.    Published  September,  1918. 


PREFACE 

This  book  is  the  result  of  forty  years'  experience 
and  service  in  one  of  the  largest  distributing  houses  in 
the  country,  and  consequently  it  reflects  methods  and 
processes  which  are  in  constant  daily  use.  The  outlines 
of  teaching  some  phases  of  Merchandising  are  those  I 
found  necessary  to  employ  in  the  pursuit  of  my  duties. 
Hence  this  work  is  still  further  the  expression  of  my  con- 
viction that  all  economic  subjects  need  both  study  and 
practical  experience  for  their  proper  elucidation  and 

understanding. 

ARCHER  WALL  DOUGLAS. 

St.  Louis,  Mo., 
,  April,  1918 


382517 


CONTENTS 

CHAPTER  PAGE 

I.  THE  NATURE  AND  FUNCTION  OF  MERCHANDISING  ...  i 

II.  BUYING 6 

III.  TURNOVER  OF  STOCK 10 

IV.  THE  CARE  OF  STOCK 22 

V.  ORDERING — REGULAR  GOODS 31 

VI.  ORDERING — REGULAR  OR  STAPLE  GOODS,  CONTINUED  45 

VII.  ORDERING — SEASONABLE  GOODS 57 

VIII.  HOLIDAY  GOODS 76 

IX.  SELLING 83 

X.  FILLING  ORDERS  AND  OTHER  RELATED  FACTORS 93 

XI.  FINANCIAL  FACTORS, — CREDIT,  COLLECTING,  ACCOUNT- 
ING    101 

XII.  DISTRIBUTION no 

XIII.  ADVERTISING 128 

XIV.  THE  HUMAN  EQUATION 140 

INDEX : 149 


vfl 


MERCHANDISING 


MERCHANDISING 
CHAPTER  ONE 

THE  NATURE  AND  FUNCTION  OF  MERCHANDISING 

The  matter  of  merchandising  is  the  fundamental  factor 
in  all  commercial  activities,  which  have  distribution  for 
their  principal  purpose.  In  this  respect  it  differs  in- 
herently from  all  productive  enterprises,  such  as  manu- 
facturing, mining,  agriculture  and  similar  pursuits,  which 
have  production  for  their  first  endeavor. 

It  does  not  necessarily  follow  from  this  statement  that 
a  factor  which  is  primal  is  consequently  the  most  im- 
portant of  all  the  various  phases  of  the  business  in  ques- 
tion, but  rather  that  its  problems  must  first  be  solved 
before  the  successful  prosecution  of  the  other  factors  can 
be  undertaken.  As  a  matter  of  fact  it  is  a  common  cus- 
tom, founded  upon  a  curious  and  ineradicable  trait  in 
human  nature,  for  those  engaged  in  any  particular  phase 
of  business  to  exalt  its  importance  in  relation  to  the 
general  whole.  The  truer  point  of  view  is  that  each 
component  of  any  business  is  a  necessary  adjunct  to  the 
whole,  and  also  that  it  involves  different  treatment  and 
different  capabilities  from  its  co-ordinate  pursuits.  It 


2  -     MERCHANDISING 

is  none  the  less  true  that  the  broad  principle  of  merchand- 
ising is  probably  the  least  understood  of  any  one  factor 
in  the  business  of  distribution,  and  the  one  to  which  the 
least  intelligent  and  scientific  study  has  been  given.  It 
is  unduly  burdened  with  the  ways  and  methods  of  the 
past,  which  rest  upon  no  more  logical  basis  than  that  of 
custom,  and  which  are  often  out  of  touch  with  modern 
conditions.  It  is  likewise  the  victim  of  antiquated  axioms 
and  rule  of  thumb  procedures,  which  hamper  its  useful- 
ness and  obscure  its  real  purpose.  It  inherently  pos- 
sesses far  reaching  and  most  important  possibilities,  as 
an  intelligent  study  of  it  will  plainly  demonstrate.  It 
is  likewise  capable  of  the  application  of  much  scientific 
analysis,  as  the  ensuing  chapters  will  endeavor  to  make 
clear. 

In  its  treatment,  the  various  factors  which  make  up 
the  general  whole  will  be  considered  in  the  priority  of 
their  application  in  practical  use.  Briefly  stated,  the 
purpose  and  function  of  merchandising  is  the  providing 
of  merchandise,  or  "goods"  as  they  are  generally  known 
in  trade,  in  such  quantities,  of  such  quality,  and  in  such 
assortments  as  will  supply  the  wants,  desires  and  tastes 
of  the  ultimate  consumers  for  whose  use  they  are  in- 
tended. 

This  definition  must  be  understood  to  include  and 
comprehend  all  the  various  operations  of  business  which 
result  in  the  transfer  of  the  goods  from  manufacturer  to 


NATURE  AND  FUNCTION  OF  MERCHANDISING  3 

the  consumer.  There  follows  later  on  in  this  chapter  a 
statement  of  these  different  operations  or  factors,  with 
a  brief  statement  of  their  various  functions,  which  will 
be  treated  at  greater  length  under  their  appropriate  head- 
ings in  succeeding  chapters.  These  factors  are  considered 
in  general  from  the  standpoint  of  the  practices  of  the 
jobber  or  wholesaler  distributer,  as  this  offers  a  broader 
field  for  consideration  than  the  retail  trade  only.  To- 
day, however,  in  some  sections,  especially  in  the  South, 
it  is  difficult  to  make  a  sharp  distinction  between  the 
wholesaler  and  the  retailer,  as  many  large  merchants 
combine  both  functions.  Also  in  some  large  cities  there 
are  merchants  who,  while  doing  a  strictly  retail  business, 
are  none  the  less  large  distributers.  The  usual  distinc- 
tion made  between  a  wholesaler  and  a  retailer  is  that  a 
wholesaler  sells  only  to  retailers,  and  not  directly  to  the 
users  or  consumers,  while  the  retailers  sell  only  to  users 
or  consumers.  Yet  this  distinction  is  not  invariable, 
since  some  wholesalers  sell  to  such  consumers  as  railroads, 
mines,  manufacturers  and  contractors. 

It  will  be  seen  thus  that  merchandising  is  one  of  the 
inherent  parts  or  factors  of  general  commerce,  as  is 
manufacturing,  transportation,  mining,  banking,  agri- 
culture, fishing,  lumbering  and  each  of  the  various  com- 
ponents of  production  and  distribution  which  constitute 
the  world  of  business.  Lest  there  be  any  confusion  of 
thought  as  to  the  meaning  of  the  terms  employed  in  this 


4  MERCHANDISING 

book,  it  must  be  borne  in  mind  that  in  business  circles  of 
the  workyday  world  the  term  "production"  means  in  its 
elemental  and  primitive  sense,  the  making  of  something 
entirely  new,  either  by  change  of  form,  as  in  mining  and 
manufacturing,  or  by  change  of  nature,  as  in  agriculture, 
where  the  elements  of  the  earth,  air  and  water  are  com- 
bined by  natural  processes  into  new  and  different  prod- 
ucts, while  in  economics  the  term  "production"  is  often 
applied  to  the  creation  of  values,  as  for  instance  in  the 
case  where  the  merchant  transports  articles  from  a  place 
where  there  is  no  call  for  them  to  other  localities  where 
a  demand  for  them  exists,  and  thus  gives  them  new 
values.  In  this  book  the  term  "production"  is  used  in 
the  sense  in  which  it  is  generally  understood  in  the 
everyday  business  world. 

The  various  chapters  taken  in  their  sequence  treat  the 
subject  of  merchandising,  as  follows: 

Buying:  The  initial  performance  is  that  of  buying 
the  goods,  which  are  to  be  the  object  of  merchandising. 

The  Turnover  of  Stock:  An  essential  element  of  that 
phase  of  merchandising  which  directly  has  financial 
profit  for  its  object. 

The  Care  of  Stock:  The  economical  and  efficient  han- 
dling and  care  of  the  goods  when  received. 

Ordering:  The  placing  of  specifications  or  orders  for  the 
goods  when  once  bought  and  how  this  shall  best  be  done. 


NATURE    AND    FUNCTION    OF    MERCHANDISING    5 

Selling:  The  sale  of  the  goods  to  customers,  since  all 
previous  operations  lead  up  to  this  important  climax. 

Filling  Orders:  The  shipment  of  the  goods  to  the  cus- 
tomers to  whom  they  have  been  sold. 

Financial  Factors:  Their  important  bearing  on  the 
results  of  merchandising. 

Distribution:  How  merchandising  is  vitally  affected 
by  the  problem  of  getting  goods  to  the  retail  distribu- 
ters and  the  ultimate  consumers. 

Advertising:  How  it  affects  merchandising  by  increas- 
ing the  sale  of  the  goods. 

The  Human  Equation:  How  in  the  last  analysis  suc- 
cessful merchandising  depends  upon  the  efficiency  of 
the  human  unit. 

The  ultimate  purpose  of  merchandising  is  that  of  all 
commercial  pursuits,  namely,  financial  profit  through  the 
observance  of  intelligent  and  efficient  business  methods. 


CHAPTER  n 

BUYING 

Obviously  the  beginning  of  merchandising  is  the 
purchase  of  such  goods  as  form  the  basis  of  the  mer- 
chandising policy.  Although  it  is  true  that  practically 
every  phase  of  buying  has  either  a  direct  or  indirect 
effect  on  merchandising,  yet  it  is  more  convenient 
to  treat  some  of  the  minor  elements  of  buying  in 
connection  with  the  various  factors  in  merchandising, 
as  the  latter  occur  in  their  proper  sequence.  It  must 
also  be  noted  that  at  times  the  policy  of  buying  is  totally 
at  variance  with  some  of  the  vital  principles  of  order- 
ing, especially  when  such  departures  indicate  a  greater 
promise  of  profit  than  by  following  the  general  axioms  of 
merchandising.  This  is  especially  the  case  in  periods 
of  advancing  prices  when  the  wise  policy  is  to  make 
conmitments  farther  ahead  and  to  carry  much  larger 
stocks  than  are  needed  to  supply  only  the  immediate 
wants  of  customers.  For  after  all,  the  successful  policy 
of  every  commercial  organization  has  thoughtful  op- 
portunism for  its  guide  rather  than  cast  iron,  fixed 

principles,  like  unto  the  law  of  the  Medes  and  the  Per- 

6 


BUYING  7 

sians  which  altereth  not.  The  truth  is  that  there  are 
comparatively  few  policies  in  business,  save  those 
of  honesty  and  fair  dealing,  which  cannot  safely  and 
wisely  be  made  to  conform  to  ever  changing  conditions. 

In  most  large  jobbing  or  wholesale  concerns,  the 
element  of  buying  is  apt  to  have  undue  importance  at- 
tached to  it,  especially  in  comparison  with  ordering 
and  selling.  For  instance  the  axiom  that  "Goods  well 
bought  are  half  sold"  for  many  years  was  unthinkingly 
accepted  as  a  fundamental  truth  until  the  art  and  sci- 
ence of  selling  came  to  be  more  generally  and  intel- 
ligently understood.  Suffice  it  to  say  that  buying  is 
a  pursuit  whose  success  demands  the  most  careful  study 
and  analysis,  especially  from  the  human  side,  although 
it  is  foreign  to  the  purpose  of  this  book  to  treat  of  it 
save  in  relation  to  merchandising. 

In  most  business  organizations,  both  wholesale  and 
retail,  the  functions  of  buying  and  ordering  of  goods 
are  usually  combined  in  the  same  persons.  Of  late  years, 
however,  and  in  concerns  large  enough  to  make  the 
practice  economical,  it  has  been  found  wise  to  separate 
entirely  the  two  duties.  The  reasons  for  this  are  largely 
psychological.  The  buyer  is  naturally  a  "bull"  on 
prices,  since  the  profit  he  directly  shows  as  his  share  of 
the  business  gain  is  largely  the  result  of  an  advance 


8  MERCHANDISING 

in  the  prices  of  goods  bought  at  lower  figures.  This 
point  of  view  often  has  a  tendency  to  cause  him  to  pur- 
chase more  heavily  than  conditions  warrant,  and  con- 
sequently to  be  loaded  up  with  overstocks  of  goods, 
thus  involving  the  expense  of  heavy  carrying  charges. 
He  is  also  apt  to  buy  from  the  manufacturer  making 
the  lowest  prices  rather  than  the  one  rendering  the  best 
service.  Furthermore  he  is  constantly  tempted  by  a 
special  price  for  large  quantities  to  order  more  goods 
than  results  show  to  be  either  wise  or  profitable. 

The  instinct  of  ordering  is  the  reverse  of  all  this.  For 
the  orderer  of  goods,  who  is  not  at  the  same  time  a 
buyer,  has  for  his  main  purpose  the  constant  "turnover 
of  stock,"  and  this  confines  his  commitments  as  far  as 
possible  to  immediate  wants. 

This  apparent  conflict  between  buying  and  ordering 
policies  often  assumes  a  phase  somewhat  as  follows: 

A  jobber  in  a  large  city  finds  that  he  can  purchase 
some  article  made  in  the  city  more  cheaply  from  a  manu- 
facturer in  another  city  than  from  the  local  maker. 
If  it  be  a  staple  item,  such  for  instance  as  nails,  or  car- 
riage bolts,  it  is  often  more  profitable  to  buy  from  the 
local  manufacturer,  provided  the  cost  of  doing  so  be  not 
too  great.  The  components  that  determine  this  prob- 
lem are  about  as  follows:  that  the  advance  in  price 


BUYING  9 

charged  by  the  local  manufacturer  be  not  too  great, 
also  that  he  give  prompt  service.  With  these  requisites 
the  resultant  small  stock  carried  and  the  consequent 
rapid  turnover  of  stock,  more  than  offset  the  lower 
price  of  the  far  away  manufacturer.  The  latter  suf- 
fers also  the  additional  handicap  of  not  being  able  to 
deliver  his  goods  as  promptly  as  the  local  manufacturer, 
consequently  the  jobber  is  forced  to  carry  a  larger  stock 
when  buying  from  him.  The  wholesaler  is  thus  enabled, 
when  buying  from  the  local  or  nearby  manufacturer, 
to  fulfill  one  of  the  fundamental  principles  of  ordering, 
namely,  carrying  the  smallest  possible  amount  of  stock 
by  placing  constant  small  orders  at  frequent  intervals. 
The  continuing  aim  of  buying  is  to  purchase  at  lower 
figures  than  those  generally  prevailing  on  the  market, 
and  thus  to  make  a  profit  over  one's  competitors  because 
of  this  special  concession  in  prices.  This  is  accomplished 
only  when  this  special  price  is  reserved  as  net  profit, 
and  not  reflected  in  a  lower  selling  price  to  customers. 
What  actually  happens  in  the  great  majority  of  cases 
is  a  lower  selling  price,  because  of  a  lower  cost,  and  an 
endeavor  thus  to  obtain  additional  business  on  this 
basis.  It  is  this  latter  phase  only  which  directly  affects  the 
policy  of  ordering,  and  will  be  treated  under  the  subject 
of  selling. 


CHAPTER  m 

TURNOVER  OF  STOCK 

The  most  fundamental  and  important  factor  in  mer- 
chandising is  that  of  the  "turnover"  of  the  stock  of 
merchandise  on  hand.  Its  purpose  is  the  employment 
of  the  least  possible  amount  of  capital  in  the  business, 
as  shown  hi  its  investment  in  the  stock  of  goods  on 
hand,  consistent  with  having  enough  goods  always  to 
fill  orders  promptly.  Its  value  as  a  money  making  fac- 
tor of  prime  importance  can  only  fairly  be  judged  in 
% 
full  measure  in  normal  times  when  speculation  is  largely 

absent  and  when  goods  are  plentiful  and  can  be  had 
readily.  Under  such  conditions  not  only  is  the  element 
of  speculative  profit  absent,  but  competition  is  most 
severe  and  consequently  there  is  not  the  usual  percentage 
of  gross  profit — or  the  difference  between  the  cost  of  the 
goods  and  what  they  are  sold  for.  The  turnover  of  the 
stock,  then,  becomes  a  most  necessary  component  in  the 
problem  of  obtaining  sufficient  net  returns  on  the  volume 
of  business.  Theoretically  all  money  invested  in  the 

stock  of  merchandise  on  hand  must  have  charged  against 

10 


TURNOVER  OF  STOCK  It 

it  the  current  rates  at  which  mercantile  loans  are  usu- 
ally obtained,  or  say  an  average  of  6%  per  annum.  So 
far  as  results  are  concerned,  it  does  not  matter  whether 
the  capital  so  invested  in  a  stock  of  goods  is  all  owned 
by  the  concern  in  question,  or  whether  a  part  of  it  is  bor- 
rowed from  the  banks.  For  the  logic  of  the  situation 
is  that  if  the  money  owned  by  the  concern  was  not  thus 
locked  up  in  stocks  of  merchandise,  it  could  be  loaned 
out  at  the  current  rate  of  interest  and  thus  be  earning 
6%,  when  now  it  is  not  earning  anything. 

As  a  matter  of  fact  it  is  rather  an  advantage  for  a  mer- 
cantile concern  to  own  only  the  large  portion  of  its  cap- 
ital, and  to  be  a  borrower  for  the  remainder  needed  to 
finance  its  operations,  rather  than  to  own  outright  the 
entire  capital  it  employs.  In  the  former  case  the  bor- 
rowed capital  can  often  be  obtained  on  demand  and 
repaid  in  dull  times  when  there  is  no  immediate  use  for 
it,  thus  doing  away  with  interest  charges  for  the  time 
being.  On  the  other  hand,  when  the  concern  owns  all 
of  its  capital,  there  are  times  when  the  trade  is  quiet 
and  the  volume  of  business  small,  and  when  the  surplus 
capital  cannot  be  loaned  out  on  demand  save  at  a  low 
rate  of  interest.  For  it  is  seldom  safe  to  loan  it  on  time 
at  current  rates,  since  it  may  be  needed  at  any  moment, 
and  practically  must  always  be  available  as  liquid  cap- 


12  MERCHANDISING 

ital.  Besides  it  is  rarely  ever  practicable  for  a  mercan- 
tile concern  to  loan  money  in  this  fashion,  and  it  must 
therefore  generally  be  content  with  the  small  rate  of 
interest  which  banks  give  on  deposits.  All  money  in- 
vested in  stock  is  therefore  subject  to  an  interest  charge, 
and  it  is  consequently  a  matter  of  necessary  profit  that 
only  as  much  of  it  should  be  so  invested  as  is  needed 
for  the  safe  and  successful  conduct  of  the  business. 
In  addition  to  interest  charges  against  the  stock  on  hand, 
there  are  also  to  be  considered  insurance,  rent  and  depre- 
ciation, and  taxes,  and  the  sum  of  all  these  expenses  of 
having  stock  on  hand  are  what  are  known  as  carrying 
charges. 

Insurance  varies  according  to  the  nature  of  the  goods 
and  the  building  in  which  they  are  stored.  Rent  depends 
largely  upon  location  and  the  character  of  the  building. 
In  a  wholesale  business  its  cost  bears  less  heavily  pro- 
portionately upon  the  total  cost  of  doing  business  than 
almost  any  other  item  of  expense  because  of  its  very 
small  ratio  to  the  entire  expense,  as  it  does  not  usually 
run  any  higher  than  i  or  ij^%.  In  a  retail  business, 
however,  it  is  a  serious  factor,  because  often  retail  stands 
are  in  the  most  expensive  portions  of  the  city,  and  it  be- 
comes a  great  burden  if  the  volume  of  business  be  not 
in  proportion. 


TURNOVER  OF  STOCK  13 

Depreciation  varies  much  according  as  to  whether  the 
goods  are  perishable  or  not,  and  the  extent  to  which  they 
are  affected  by  the  weather.  In  general  in  most  branches 
of  business  it  is  of  minor  importance.  It  will  therefore 
be  seen  that  only  a  general  statement  can  be  made  as 
to  the  ratio  of  carrying  charges  to  the  amount  of  money 
invested  in  stocks  of  merchandise.  For  the  sake  of 
our  argument,  the  sum  of  all  these  carrying  charges  is 
reckoned  at  an  average  of  i%  per  month  or  12%  per 
annum.  That  is  to  say,  that  $10,000.00  invested  in  a 
stock  of  goods  costs  $100.00  per  month,  or  $1200.00 
per  annum. 

Let  us  take  a  case  of  a  jobber  whose  average  stock 
of  merchandise  is  $100,000.00  and  who  does  a  business 
annually  of  $300,000.00  at  cost  figures.  He  has  there- 
fore turned  his  stock  three  times,  that  being  the  relation 
of  the  total  sales  to  the  average  stock  on  hand.  Mean- 
while another  jobber  in  the  same  line  of  business  has  an 
average  stock  on  hand  of  only  $75,000.00,  but  does  the 
same  volume  of  business  as  the  first  merchant,  namely, 
$300,000.00.  His  turnover  is  four  times  per  annum. 
Consequently,  other  things  being  equal,  the  second  mer- 
chant saves  the  carrying  charges  on  $25,000.00  (the  less 
amount  of  stock  on  hand),  or  $3,000.00  per  annum,  be- 
cause of  a  greater  turnover.  There  is  also  another 


14  MERCHANDISING 

factor  in  the  situation,  namely,  that  the  $25,000.00 
thus  saved  because  of  more  rapid  turnover  can  be 
invested  in  stock  on  hand  if  desired  to  increase 
the  stock  to  that  extent,  and  thus  be  earning 
whatever  is  the  average  rate  of  profit  of  the  con- 
cern. 

It  is  well  to  understand  that  in  figuring  the  turnover 
of  an  average  stock  of  merchandise  that  there  must  first 
be  established  an  equality  of  value  between  the  merchan- 
dise stock  on  hand  and  the  amount  of  sales.  For  the 
value  of  a  stock  of  merchandise  is  always  the  cost  price 
paid  for  it,  while  sales  are  reckoned  in  the  selling  prices 
obtained  for  this  same  merchandise.  For  instance  the 
distributer  finds  that  he  gets  on  the  average  20%  more 
for  his  goods  than  he  pays  for  them.  This  20%  is  his 
"gross  profit."  If  his  average  stock  of  merchandise  is 
$100,000.00  and  his  annual  sales  are  $360,000.00,  in 
order  to  have  an  actual  comparison  of  values  in  esti- 
mating his  turnover  he  must  reduce  his  sales  to  the 
same  common  denominator  as  his  stock  of  merchandise 
by  deducting  i62/s%,  from  them.  For  if  $100.00  be  the 
cost  value  of  any  article  of  merchandise,  and  the  gross 
profit  between  sales  figures  and  the  cost  be  20%,  then 
the  equation  is: 


TURNOVER  OF  STOCK  15 

$100.00  +  20%  (or  $20.00)  =$120.00 
and  deducting  i62/s%  =     20.00 

brings  it  back  again  to  the 
cost  value  $100.00 

The  examples  in  paragraph  above  have  sales  values 
reduced  to  the  same  common  denominator  as  merchan- 
dise stock. 

In  the  matter  of  individual  items  or  lines  of  goods,  the 
same  profitable  result  of  an  increased  turnover  is  easily 
apparent.  Let  us  take  for  example  two  lines  of  goods  in 
the  hardware  business,  entirely  distinct  in  their  nature 
and  uses — wire  nails  and  old  style  razors.  Let  us  assume 
arbitrarily,  in  order  to  make  the  demonstration  clearer, 
and  without  any  relation  to  the  actual  facts  in  the  case, 
that  old  style  razors  bear  the  merchant  a  gross  profit  of 
50%,  while  the  gross  profit  on  wire  nails  is  only  7^%. 
The  average  merchant  is  apt  to  assume  that  because  of 
the  great  difference  in  the  gross  profits  of  the  two  articles 
that  old  style  razors  are  very  profitable  and  wire  nails  are 
not.  Facts  do  not  bear  out  this  assumption,  provided 
both  articles  be  subjected  to  the  same  intelligent  system 
of  merchandising.  The  cost  of  handling  and  selling  wire 
nails  is  much  less  than  that  of  old  style  razors.  Wire 
nails  can  be  stored  in  cheap  warehouses  where  rent  and 
insurance  are  small.  Nor  is  there  any  depreciation  in 


16  MERCHANDISING 

them  when  kept  in  stock  for  some  time.  They  can  be 
handled  by  cheap  labor.  Moreover,  the  cost  of  selling 
wire  nails  is  very  low.  They  are  bought  by  the  dealer 
or  consumer  when  needed  and  without  any  special  effort 
on  the  part  of  the  salesman.  On  the  other  hand,  old  style 
razors  have  to  be  kept  where  they  are  not  exposed  to  mois- 
ture and  where  they  are  secure  from  theft.  This  implies 
higher  rent  and  insurance  charges  than  on  nails.  They 
require  higher  priced  labor  in  handling  than  wire  nails. 
They  do  not  "sell  themselves"  as  in  the  case  of  the 
nails,  but  are  usually  sold  from  samples  carried  by  the 
salesman,  and  often  require  much  art  and  time  to  effect 
their  sales.  If  therefore  the  average  cost  of  doing  business 
of  any  concern  is  18%,  it  is  probable  that  the  total  cost 
of  handling  nails  is  only  about  5%,  while  that  of  old  style 
razors  is  25%. 

The  percentage  cost  of  doing  business  is  arrived  at  by 
the  relation  of  the  total  sales  to  the  total  expenses.  If 
the  annual  sales  of  a  concern  are  $1,000,000.00  and  the 
total  expenses  for  the  same  period  $180,000.00,  then  the 
percentage  cost  of  doing  business  of  that  concern  is  18%. 
It  is  evident  that  it  costs  more  to  handle  some  lines  of 
goods  than  others,  and  consequently  that  the  percentage 
cost  of  doing  business  on  some  lines  is  greater  than  the 
average  of  18%  and  on  others  it  is  less.  In  general,  how- 


TURNOVER  OF  STOCK  17 

ever,  any  attempt  to  differentiate  more  than  approxi- 
mately the  cost  of  doing  business  among  all  the  different 
lines  which  make  up  the  assortment  of  a  mercantile  store 
is  too  complex  and  moreover  is  rarely  of  any  practical 
value. 

As  an  example,  however,  of  the  value  of  the  turn- 
over in  affecting  profits,  let  us  assume  that  the  gross 
profits  of  old  style  razors  are  50%  and  the  cost  of  han- 
dling them  about  25%  while  the  cost  of  handling  wire 
nails  is  5%  and  their  gross  profit  7/^%.  Wire  nails 
are  supposed  to  be  made  by  a  nearby  nail  and  wire 
mill,  who  can  ship  orders  promptly  and  can  also  make 
quick  deliveries,  so  that  there  is  no  need  of  the  jobber 
carrying  a  large  stock  of  these  goods,  thus  rendering 
possible  a  frequent  turnover  of  stock.  On  the  other 
hand,  old  style  razors  are  mostly  imported,  or  rather 
they  were  before  the  European  war.  So  it  takes  some 
time  for  the  order  to  reach  the  manufacturer,  and 
some  time  for  shipment  to  reach  this  country  after  it 
is  once  made.  In  the  case  of  wire  nails  if  any  one 
size  runs  out  unexpectedly,  it  is  a  very  simple  matter 
to  wire  or  telephone  the  nail  mill  and  get  prompt  ship- 
ment. Obviously  this  cannot  be  done  in  the  case  of 
old  style  razors,  so  a  complete  stock  must  be  ordered 
some  time  in  advance,  and  of  such  assortment  and  quan- 


i8  MERCHANDISING 

tity  as  will  keep  the  stock  intact  for  many  months. 
We  assume,  then,  that  it  is  only  necessary  to  carry 
a  little  over  three  weeks'  stock  of  wire  nails  on  hand  at 
any  one  time,  while  six  months'  stock  of  old  style  razors 
is  the  least  it  is  safe  to  provide  for.  The  problem  then 
assumes  the  following  phase:  If  we  invest  $10,000.00 
in  wire  nails  and  turn  the  stock  over  14  times  annually, 
we  have  a  total  investment  of  $140,000.00  on  which  we 
make  a  gross  profit  of  7}^%  or  $10,500.00,  but  this 
gross  profit  is  practically  on  $10,000.00,  which  was  re- 
invested some  14  times.  If  we  invest  the  same  amount, 
$10,000.00,  in  old  style  razors,  and  turn  the  stock  over 
twice  annually,  or  once  every  six  months,  and  have  a 
gross  profit  of  50%,  then  we  have  a  total  investment 
of  $20,000.00,  and  a  gross  profit  of  $10,000.00.  Assum- 
ing that  the  cost  of  doing  business  on  wire  nails  is  5% 
and  on  old  style  razors  is  25%,  we  then  have  the  fol- 
lowing conclusion: 

Wire  Nails,  gross  profit $10,500.00 

Less  cost  of  doing  business,  5%  on 
$140,000.00 7,000.00 


3,500.00, 

or  practically  a  net  profit  of  35%  on  the  $10,000.00  we 
have  so  constantly  invested. 


TURNOVER  OF  STOCK  19 

Old  Style  Razors,  gross  profit  ......  $10,000.00 

Cost   of   doing   business,    25%   on 
$20,000.00  .....................     5,000.00 

5,000.00 

or  a  net  profit  of  50%  on  the  $10,000.00  so  constantly 
invested. 

It  will  thus  be  seen  that  old  style  razors,  with  a  gross 
profit  of  more  than  600%  greater  than  wire  nails,  are 
only  able  to  show,  because  of  a  smaller  turnover,  a  net 
profit  of  about  40%  greater.  The  real  purpose  of  the 
turnover  in  the  case  of  wire  nails  is  to  obtain  a  satis- 
factory profit  on  an  article  with  a  low  rate  of  both  gross 
and  net  profit  but  with  possibilities  of  a  high  turnover.  If 
for  instance,  through  lack  of  intelligent  attention  and 
ordering,  the  turnover  on  wire  nails  is  only  7  times  per 
annum,  we  have  the  following  situation: 

7  times  $10,000.00  ................  $70,000.00 

total  capital  employed. 
Gross  profit  7^5%  ................  $  5>25°-°° 

Cost    of    doing    business    5%    on 
$70,000.00  ..................... 


1,750.00, 

or  a  net  profit  of  one-half  of  that  when  the  turnover  was 
14  times  instead  of  7. 


20  MERCHANDISING 

It  is  essential,  however,  that  the  gross  profit  on  any 
article  shall  exceed  the  cost  of  doing  business  on  that 
article,  for  frequent  turnovers  cannot  create  a  profit 
where  none  exists.  The  amount  of  capital  constantly 
reinvested  is  not  exactly  the  same  amount  each  time, 
but  somewhat  larger  on  the  whole.  This  because  of 
what  may  be  called  the  "laps  and  slams"  of  business. 
In  the  case  of  a  wholesaler,  for  instance,  while  he  pays 
cash  promptly  on  10  days'  time  for  wire  nails  he  pur- 
chases from  the  manufacturer,  he  does  not  receive  this 
money  back  as  promptly  from  his  customers,  the  retail 
trade.  Probably  not  over  50%  of  them  discount  their 
wire  nail  bills  within  ten  days'  time.  The  remainder 
take  from  30  to  60  days  before  remitting  for  them. 
Therefore  as  the  wholesaler  does  not  receive  his  money 
back  as  promptly  as  he  pays  the  manufacturer,  in  order 
to  bridge  this  gap  he  has  to  add  something  to  it.  To  this 
small  extent  which  it  is  not  possible  to  estimate  with 
any  approach  to  accuracy,  there  is  somewhat  more 
capital  invested  than  the  original  $10,000.00,  and  con- 
sequently the  favorable  showing  as  to  the  per  cent  of 
earnings  by  quick  turnover  is  that  much  affected. 

The  rate  of  turnover  is  found  by  the  relation  of  aver- 
age stock  on  hand  to  the  total  annual  sales.  If  the  sales 
of  wire  nails  are  140,000  kegs  per  annum,  and  the  aver- 


TURNOVER  OF  STOCK  21 

age  stock  10,000  kegs,  then  the  annual  turn  over  is  14 
times. 

The  unit  employed  in  merchandising  in  estimating 
the  .turnover  on  lines  of  goods  or  individual  articles  is 
usually  that  of  quantity,  rather  than  dollars  and  cents, 
though  the  result  is  practically  the  same  in  both  cases. 
In  the  following  chapter  we  will  consider  the  methods 
by  which  the  turnover  of  stock  is  accomplished. 


CHAPTER  IV 

THE  CARE  OF  STOCK 

The  general  principles  of  merchandising  are  equally 
applicable  to  wholesale  and  retail  distribution,  but  the 
methods  of  application  often  differ  in  degree  rather  than 
in  kind. 

Many  systems  in  merchandising  are  necessitated  in 
the  wholesale  or  jobbing  trade  because  of  the  size  of 
the  business,  whereas  to  attempt  to  apply  such  systems 
in  their  entirety  to  retail  business  would  be  both  unfit- 
ting and  expensive.  This  is  the  case  in  less  degree  with 
the  smaller  jobber,  as  compared  with  the  larger  dis- 
tributer. By  force  of  circumstances  and  difference  in 
environment  the  lesser  business  must  often  substitute 
the  human  equation  for  mechanical  methods  and  systems. 

The  plans  and  policies  outlined  in  this  book  are  in- 
tended in  their  primary  application  for  the  large  whole- 
sale distributer,  though  in  essence  they  are  equally  ap- 
plicable to  the  retail  dealer  with  such  modifications  as 
the  difference  in  surroundings  and  the  size  of  the  busi- 
ness render  necessary. 

All   successful   merchandising  is  predicated   on  the 


22 


THE  CARE  OF  STOCK  23 

proper  care  and  handling  of  the  stock  of  goods  on  hand. 
There  must  be  an  accurate  system  which  registers  the 
receipt  and  shipment  of  goods  so  far  as  they  affect  the 
amount  and  volume  of  stock  on  hand.  There  must  also 
be  always  available  the  knowledge  whether  goods  on 
orders  have  been  shipped;  that  is,  are  "on  the  road" 
as  it  is  usually  called.  Above  all  there  must  be  a  reliable 
method  of  accurately  "taking  an  account  of  stock,"  as 
it  is  generally  known.  In  other  words,  it  must  be  pos- 
sible to  know  on  specified  fixed  dates  just  how  many 
items  of  all  goods  are  on  hand.  The  first  purpose  of  such 
knowledge  is  to  determine  what  the  sales  have  been  for 
a  certain  period  just  passed,  and  thus  decide  whether  to 
place  additional  orders;  and  if  so,  in  what  quantities. 
The  details  of  this  system  will  be  fully  treated  in  the 
chapter  on  "Ordering." 

Taking  stock  of  any  long  line  of  goods,  as  for  in- 
stance carriage  bolts,  demands  both  care  and  experience. 
The  man  counting  the  goods  must  be  familiar  with 
them  and  must  likewise  be  very  accurate.  To  fail  to 
count  all  the  goods  and  thus  report  fewer  goods  on  hand 
than  is  really  the  case  means  showing  larger  sales  than 
actually  exist  and  consequently  the  placing  of  a  larger 
order  than  should  be  the  case,  with  resulting  overstocks. 
If,  for  instance,  the  account  of  stock  on  a  certain  date 


24  MERCHANDISING 

reports  200  kegs  of  8d  common  wire  nails,  when  the 
real  stock  is  500  kegs,  there  may  result  something  like 
this:  the  sales,  say  for  the  past  30  days  or  the  date 
when  the  previous  account  of  stock  of  nails  was  taken, 
would  show  300  kegs  greater  than  was  really  the  case. 
The  new  order  which  is  placed  will  therefore  be  for 
more  nails  than  are  actually  needed  and  will  consequently 
be  an  overstock  to  that  extent.  On  the  other  hand, 
if  the  stock  on  hand  is  reported  at  800  kegs  when 
it  really  is  500  kegs,  the  sales  are  wrong  to  the  extent 
of  the  error  and  the  order  placed  will  be  just  that  much 
too  small.  A  shortage  of  goods  will  consequently  soon 
develop,  unless  the  error  be  discovered  in  time.  It  is 
therefore  very  important  that  the  stockman,  whose  duty 
it  is  to  take  account  of  stock,  shall  have  this  made 
his  first  duty,  and  shall  not,  as  is  often  the  case,  be 
forced  to  neglect  taking  accounts  of  stock  because  of 
being  called  away  in  very  busy  times  to  assist  in  getting 
out  goods  for  shipment. 

In  most  large  jobbing  houses  stocks  of  long  lines  of 
goods  are  carried  in  two  ways,  or  what  is  known  as 
" duplicate "  and  "open"  stocks.  In  the  case  of  wood 
screws,  for  instance,  it  is  found  that  the  stock  of  staple 
sizes  is  too  large  to  go  in  the  bins  from  which  they  are 
to  be  taken  out  to  fill  orders,  so  a  full  case  of  a  staple 


THE  CARE  OF  STOCK  25 

size  is  opened  and  the  bin  filled  with  all  it  will  hold. 
This  may  mean  only  200 .'gross  of  a  staple  size,  say 
i  x  10,  whereas  the  total  stock  of  that  particular  size 
on  hand  may  be  2000  gross.  The  remainder,  or  1800 
gross,  are  stored  away  in  the  original  cases,  as  they 
came  from  the  manufacturer,  in  the  cellar  of  the  same 
building  or  in  some  adjoining  or  nearby  warehouse. 
Whenever  the  bin  containing  the  open  stock  needs  re- 
plenishing, a  case  is  opened  in  the  duplicate  stock  and 
the  necessary  amount  sent  to  the  open  stock,  so  when- 
ever the  account  of  stocks  of  wood  screws  is  taken  the 
stock  must  be  counted  in  both  open  and  duplicate 
stocks.  To  save  this  unnecessary  labor  there  is  often 
used  in  duplicate  stock  what  is  known  as  "a  perpetual 
inventory,"  where  the  account  of  stock  is  kept  up  to 
date  by  the  simple  process  of  addition  and  subtraction. 
For  instance,  on  the  card  which  is  attached  to  each  bin, 
there  is  a  constant  record  of  the  shipments  received 
from  the  manufacturer,  and  of  the  amounts  sent  to  open 
stock  to  be  shipped  to  customers.  The  difference  be- 
tween these  figures  shows  the  stock  on  hand  at  any 
given  period.  This  perpetual  inventory  must  be  veri- 
fied from  time  to  time  by  an  actual  taking  of  the  stock 
in  duplicate,  for,  owing  to  human  forgetfulness  in  not 
putting  down  on  the  cards  all  the  additions  and  sub- 


26  MERCHANDISING 

tractions,  the  stock  record  on  the  card  will  otherwise 
become  very  inaccurate.  The  perpetual  inventory  sys- 
tem is  confined  to  duplicate  stocks  only,  as  the  amounts 
in  the  open  stock  are  small  enough  to  be  easily 
counted.  The  dual  system — open  and  duplicate — is  like- 
wise applicable  only  to  complicated  lines  of  much  volume 
and  in  large  quantities.  Other  stocks,  with  lesser  as- 
sortments and  smaller  quantities  are  all  kept  in  open 
stocks.  The  dual  system  necessitates  extra  care  and  ac- 
curacy hi  keeping  track  of  the  goods  on  hand,  and 
emphasizes  the  need  of  trained  and  experienced  help 
for  such  purpose.  This  is  brought  out  very  succinctly 
in  the  matter  of  what  is  known  as  "Low  Reports  "  and 
"Shortage."  The  accounts  of  stock  tell  the  story  at 
the  time  of  the  condition  of  the  stock,  and  whether 
there  is  sufficiency  of  goods  or  whether  more  need  to 
be  ordered;  but  they  do  not  cover  the  daily  changes  in 
the  intervals  between  the  taking  of  these  accounts.  No 
amount  of  care  and  foresight  in  placing  orders  hi  ad- 
vance for  the  wants  between  these  intervals  of  stock 
taking  can  possibly  provide  all  the  needed  goods  and 
prevent  some  of  the  goods  from  being  exhausted.  This 
is  due  to  the  uncertainty  and  inequality  of  sales  which 
vary  constantly  from  day  to  day,  owing  to  new  and 
unexpected  demands  and  constantly  changing  con- 


THE  CARE  OF  STOCK  27 

ditions  of  business.  To  cover  these  conditions  there 
is  frequently  used  a  system  of  what  is  known  as  "Maxi- 
mum and  Minimum  Quantities."  A  memorandum  is 
taken  from  the  records  of  sales  of  the  average  sales  of 
each  item  in  stock,  say  for  60  days  during  a  period  of 
several  years.  There  is  then  established  a  maximum 
quantity  of  about  the  full  sixty  day  sales,  and  a  mini- 
mum quantity  representing  30  days'  sales.  These  quan- 
tities, of  course,  need  to  be  revised  at  long  intervals  so 
that  they  may  be  in  accordance  with  changes  in  the 
volume  of  sales.  The  maximum  quantity  represents  the 
figures  above  which  the  stock  must  not  be  allowed  to  go, 
since  all  stock  in  excess  of  such  figures  is  regarded  as  an 
overstock.  The  minimum  figures  are  those  below  which 
the  stock  must  not  be  allowed  to  fall,  since  to  do  so  in- 
curs the  risk  of  the  goods  running  out  entirely  before  the 
supply  can  be  replenished.  Both  maximum  and  mini- 
mum figures  are  placed  on  a  card  upon  the  bin  containing 
the  stock  of  the  item  in  question.  In  goods  having  both 
open  and  duplicate  stocks,  this  is  done  upon  duplicate 
stocks  only,  and  in  those  having  open  stocks  upon  the 
open  stocks.  It  then  becomes  the  duty  of  the  man  in 
charge  of  the  stock  to  report  to  the  Merchandise  Depart- 
ment whenever  the  maximum  or  minimum  figures  are 
reached  on  any  particular  item.  In  the  case  of  maximum 


28  MERCHANDISING 

figures  the  Merchandise  Department  must  prevent  any 
further  accumulation  of  stock  of  such  item  by  either  can- 
celing orders  due  for  such  goods,  or  else  holding  up  and 
deferring  shipment  of  them  for  the  tune  being,  and  by 
not  placing  any  further  orders  for  the  item  in  question 
until  the  stock  on  hand  falls  below  the  maximum  fig- 
ure. In  the  case  of  the  minimum  quantity  having  been 
reached,  a  memorandum  usually  known  as  a  "low  re- 
port" is  sent  by  the  Stock  Department  to  the  Mer- 
chandise Department,  and  it  is  then  the  duty  of  the 
latter  to  provide  the  necessary  goods  before  the  stock 
runs  out  entirely.  The  ways  and  means  of  doing  this 
will  be  discussed  under  the  head  of  "Ordering"  in  suc- 
ceeding chapters.  In  spite  of  the  most  complete  sys- 
tems, well  and  intelligently  administered,  and  the  most 
careful  and  far-sighted  ordering,  it  is  impossible  to  pre- 
vent goods  running  out  entirely,  and  this  becomes  a 
"shortage"  and  is  one  of  the  most  expensive  happen- 
ing in  business. 

The  greater  part  of  the  machinery  of  business  is  di- 
rected to  effecting  sales;  and  all  the  expense  of  operating 
this  machinery  is  incurred  to  no  purpose  in  case  of  inabil- 
ity to  fill  the  order  on  goods  because  these  are  "short;" 
that  is,  not  in  stock  and  have  to  be  omitted  from  the  order 
in  question.  There  is  the  further  disavdantage  of  the  dis- 


THE  CARE  OF  STOCK  29 

couragement  of  the  salesman  who  takes  the  order  and 
finds  that  the  goods  are  not  shipped  and  hesitates,  there- 
fore, to  make  further  sales  of  them.  Worst,  and  most 
fatal  of  all,  is  the  likelihood  of  the  customer  becoming  dis- 
satisfied when  he  finds  that  his  orders  are  not  filled  com- 
pletely and  transferring  his  business  to  some  other  concern 
in  hopes  of  receiving  better  service.  For  the  foundation 
stone  of  selling  goods  is  not  price,  but  good  service,  as  will 
be  shown  later  on.  If  the  matter  of  minimum  quantities 
is  watched  closely  the  chance  of  shortages  is  materially 
reduced,  since  opportunity  is  thus  given  the  Merchan- 
dise Department  to  prevent  shortages  by  ordering  goods 
promptly  when  the  Low  Report  is  received  from  the 
Stock  Department.  The  weakness  in  the  plan  is  that 
which  pervades  every  department  of  human  existence, 
viz.,  the  carelessness,  the  indifference,  the  thoughtlessness 
and  the  superficiality  of  human  nature.  In  most  whole- 
sale houses  the  stock  clerks  who  "work  orders"  (that 
is,  get  out  goods  to  be  shipped  on  orders)  are  supposed 
to  report  shortages  of  goods  in  the  bins  as  they  dis- 
cover them  in  the  routine  of  their  duty.  This  is  more 
or  less  automatic,  as  naturally  the  shortage  must  be 
reflected  in  the  absence  of  the  goods  which  are  short  on 
the  order,  or  "bill"  as  it  is  termed,  which  the  stock 
clerk  is  working.  But  a  case  may  occur  where  the 


30  MERCHANDISING 

stock  clerk  takes  all  the  goods  in  the  bin  to  fill  exactly  the 
order  he  is  working,  and  leaves  there  a  shortage  which 
he  fails  to  report  so  long  as  his  order  is  satisfied.  As  a 
rule,  the  stock  clerk  works  under  pressure,  as  his  effici- 
ency and  consequent  chance  of  promotion  and  higher 
salary  is  based  upon  the  volume  of  goods  he  gets  out. 
His  interest,  therefore,  is  in  getting  out  many  orders 
and  not  in  reporting  shortages.  Discovering  and  re- 
porting shortages  is  also  a  part  of  the  duty  of  the  head 
stock  man  on  each  floor  of  the  building.  But  in  spite 
of  these  systems,  shortages  will  often  not  be  reported 
promptly  because  nothing  in  the  regular  routine  of 
business  brings  them  to  the  attention  of  the  Stock 
Department,  and  thus  valuable  time  is  lost  in  replacing 
the  goods. 

The  most  efficient  method  of  proper  care  of  stock  in 
all  the  details  that  relate  to  merchandising  is  by  close 
cooperation  between  the  Stock  and  Merchandise  De- 
partments in  such  fashion  that  the  Stock  Department 
realizes  that  it  shares  equally  with  the  Merchandise 
Department  the  responsibility  of  keeping  up  the  stock 
in  such  measure,  as  far  as  humanly  possible,  that  orders 
may  be  filled  promptly  and  completely. 


CHAPTER  V 

ORDERING — REGULAR  GOODS 

The  first  requisites  of  ordering  in  merchandising  are 
accurate  and  intelligible  records,  which  show  the  stock 
on  hand  and  the  sales  of  every  article  in  stock  at  stated 
intervals  throughout  the  year.  There  are  various  sys- 
tems which  produce  these  results,  but  the  most  effective 
are  those  which  combine  all  this  necessary  information 
in  a  short  space  so  that  it  can  be  seen  and  comprehended 
at  a  glance. 

The  real  value  of  all  systems  in  business  consists  in 
their  simplicity  and  economy,  and  not  in  their  com- 
plexity. Most  systems  unfortunately  essay  to  convey 
too  much  information  and  are  consequently  confusing 
rather  than  helpful.  The  most  effective  system  in 
ordering  is  that  which  tells  on  a  card,  or  the  page  of  a 
book,  what  the  stock  on  hand  is  on  certain  specified 
dates;  what  are  the  sales  of  the  article  in  question  be- 
tween those  dates;  where  goods  were  ordered  and  in 
what  quantity:  and  whether  the  goods  so  ordered  have 
been  shipped.  Entries  of  stock  on  hand  on  such  records 

naturally  vary  as  to  the  frequency  of  their  entry  accord- 

31 


32  MERCHANDISING 

ing  to  the  nature  of  the  goods,  but  they  should  always 
be  made  as  nearly  as  possible  on  the  same  dates  each 
year,  that  the  comparisons  of  sales  from  period  to  pe- 
riod may  thus  be  absolute.  Staple  goods,  namely,  those 
which  are  bought  and  sold  in  large  quantities,  should  be 
entered  on  the  records  oftener  than  those  which  are 
comparatively  small  sellers.  In  the  former  case  it  is 
much  easier  and  more  intelligible  to  order  moderately 
and  for  goods  as  needed,  by  ordering  frequently.  Thus, 
also  by  close  and  constant  watching  there  is  less  danger 
of  accumulating  overstocks.  In  the  latter  case,  that 
of  slow  selling  goods,  it  is  quite  sufficient  and  more 
economical  to  order  at  longer  intervals  and  thus  save 
the  expense  and  labor  of  taking  accounts  of  stock  and 
of  clerical  work. 

There  should  be  a  regular  schedule  arranged  for  the 
entire  year  as  to  when  each  line  of  goods  and  each 
article  shall  be  entered.  Both  Stock  and  Merchandise 
Departments  should  have  this  schedule  constantly  be- 
fore them,  and  see  that  it  is  strictly  adhered  to.  Staple 
goods  do  not  need  to  be  entered  on  this  record  oftener 
than  once  every  30  days,  while  on  slow  selling  goods 
once  every  60  to  90  days  is  usually  sufficient.  These 
rules  apply  to  goods  such  as  are  in  demand  more  or  less 
all  the  year  around.  The  story  of  seasonable  goods,  or 


ORDERING— REGULAR  GOODS        33 

those  which  sell  only  at  certain  seasons,  is  a  different  one, 
and  will,  form  the  subject  of  a  separate  chapter. 

The  principle  of  the  record  is  very  simple.  It  shows 
that  on  certain  set  periods  of  each  year  there  were  cer- 
tain quantities  of  stocks  on  hand  of  all  the  various  ar- 
ticles carried  in  stock;  that  between  the  periods  there 
were  certain  quantities  of  these  same  articles  ordered 
and  received.  If  to  the  amount  on  hand  at  one  period 
there  be  added  the  amounts  received  into  stock  be- 
tween this,  period  and  the  next  succeeding  period, 
and  there  be  deducted  therefrom  the  amount  on  hand 
(or  in  stock)  on  this  next  succeeding  period,  there  will 
be  shown  the  sales  between  these  two  periods.  It, 
therefore,  is  very  simple  when  ordering  goods  at  any 
one  period  to  refer  to  the  same  period  for  a  number 
of  years  past  as  a  guide  for  the  quantities  to  be  ordered 
for  the  coming  period,  since  the  sales  for  that  par- 
ticular period  are  shown  in  the  records  of  the  past.  This 
record  must  also  show  all  goods  previously  ordered  which 
have  been  shipped  and  not  yet  received  in  stock,  or 
which  have  not  yet  been  shipped  and  are  still  due,  since 
both  of  these  quantities  figure  in  the  amount  needed 
for  the  next  succeeding  period.  If,  for  instance,  the 
sales  records  indicate  that  800  dozen  of  any  one  article 
are  needed  for  the  next  succeeding  period,  and  there  are 


34  MERCHANDISING 

200  dozen  of  this  article  in  stock,  200  dozen  in  transit 
(or  "on  the  road,"  as  it  is  usually  called)  and  200  dozen 
ordered  from  the  manufacturer  and  not  yet  shipped 
and  still  due,  it  is  obvious  that  it  is  only  necessary  to 
place  an  additional  order  for  200  dozen.  These  records 
are  easily  kept  up,  though  they  require  that  this  be 
carefully  done  to  insure  their  full  efficacy.  They  are 
absolutely  invaluable  in  ordering,  but  must  be  accom- 
panied by  intelligent  thought  and  study,  or  else  they  may 
prove  seriously  misleading  and  consequently  very  expen- 
sive. 

In  a  large  wholesale  distributing  organization  there 
is  usually  such  a  large  stock  of  merchandise  on  hand, 
of  such  varied  assortment,  embracing  so  many  dif- 
ferent and  varied  articles,  that  some  of  them  are  con- 
stantly being  affected,  both  in  demand  and  supply,  by 
the  thousand  and  one  things  which  occur  daily  in  the 
social  and  political,  as  well  as  in  the  economic  world. 
This  has  been  made  most  manifest  by  the  European 
War,  which  in  many  ways  upset  all  previous  conditions 
in  commercial  life,  because  of  a  profound  and  far  reach- 
ing influence  exerted  in  many  instances  on  the  most 
apparently  insignificant  articles  of  merchandise  in  daily 
use.  He,  who  is  in  charge  of  merchandising,  should 
therefore  possess  both  analytical  ability  and  vision;  the 


ORDERING— REGULAR  GOODS       35 

power  and  insight  to  analyze  each  problem  and  every 
article  in  merchandising,  and  the  vision  to  see  its  likeli- 
hoods and  possibilities,  for  ordering  goods  is  far  from  being 
the  dull,  prosaic  drudgery  which  it  is  usually  accounted. 
Instead,  it  is  an  extraordinarily  complex  and  interesting 
matter  and  a  liberal  education  when  properly  compre- 
hended. To  be  done  accurately  and  efficiently  it  needs 
constant  thought  and  study,  and  consequently  demands 
for  its  full  accomplishment  that  trained  mind  which  is  the 
best  product  of  education.  In  every  case  when  ordering 
there  should  be  in  the  beginning  an  answer  made  to 
the  following  queries:  what  is  the  article  to  be  ordered 
used  for,  by  whom  and  under  what  conditions?  How 
is  its  use  affected  by  the  weather,  by  changes  in  public 
taste  and  in  education,  by  the  price  at  which  it  is  sold, 
and  by  the  introduction  of  other  similar  articles?  Can 
it  be  readily  had  for  shipment  from  the  manufacturers? 
Will  a  more  or  less  long  delay  occur?  Will  it  be  delayed 
in  transit,  or  will  prompt  delivery  be  made?  Is  the  pur- 
pose for  which  it  is  being  used  going  out  of  fashion;  and 
if  so,  from  what  cause?  Is  it  essentially  suitable  for  the 
purpose  for  which  it  is  intended,  or  is  it  a  temporary 
matter  with  only  brief  life  for  its  portion? 

How  these  and  other  vital  and  incidental  questions 
which  occur  in  ordering  may  be  answered  is  best  illus-  fj 

•\ 


36  MERCHANDISING 

trated  by  concrete  examples.  The  first  supposititious 
case  is  that  of  a  certain  blue  and  white  enameled  ware 
to  be  ordered  at  the  present  time.  This  general  style 
of  household  wares  is  largely  the  product  of  compar- 
atively recent  time,  but  has  grown  greatly  in  favor 
and  general  use.  It  is  a  household  affair,  and  used 
largely  in  the  kitchen  and  consequently  by  women. 
It  comprises  a  great  many  articles  and  a  large  assortment 
of  many  different  items  and  of  many  different  sizes.  It 
shares  its  use  with  all  other  varieties  of  enamel  ware,  and 
all  other  wares  used  for  similar  purposes.  The  question 
of  ordering  therefore  brings  up  not  only  its  own  likeli- 
hoods and  possibilities  in  the  way  of  future  sales,  but 
likewise  those  of  all  its  competitors,  as  affecting  its  own 
future  sales,  since  all  these  matters  must  be  taken  into 
account  in  considering  the  amount  to  be  ordered.  The 
sales  records  give  the  figures  of  sales  not  only  for  the  suc- 
ceeding period  of  last  year  and  other  years,  but  also  the 
periods  of  the  present  year,  so  that  the  problem  then  be- 
comes one  of  an  examination  of  such  records  to  note  any 
f  ailing  off  or  increase  in  sales,  and  also  what  an  intelligent 
analysis  of  the  present  situation  indicates  as  to  the  future. 
It  will  be  readily  seen  then  that  this  procedure  must  take 
into  account  the  examination  and  tendency  of  the  future 
sales  of  all  the  various  wares,  enameled  and  otherwise, 


ORDERING— REGULAR  GOODS        37 

which  are  used  for   the   same   purpose  as  blue  and 
white. 

The  first  question  is  the  extent  to  which  the  demand 
among  the  different  household  wares  will  be  affected 
by  each  other.  Among  the  earliest  varieties  of  enameled 
ware  was  gray  colored  ware,  serviceable  and  compara- 
tively cheap,  so  that  it  came  to  be  in  general  use  among 
the  poorer  classes,  or  those  to  whom  economy  in  such 
matters  is  all  important.  It  can  be  set  down  as  an  axiom 
in  merchandising  that  there  will  always  be  a  large  and 
steady  demand  from  the  great  mass  of  consumers  for  ar- 
ticles of  this  nature,  because  of  their  low  price  and  effi- 
ciency. They  may  not  be  attractive  in  appearance,  but 
so  long  as  they  satisfactorily  fill  the  purpose  intended,  they 
will  be  in  constant  demand.  The  two  factors  which  ad- 
versely affect  their  sales  are  deterioration  in  quality  or 
a  serious  advance  in  price.  The  first  case  gives  con- 
tradiction to  the  rather  universal  impression  not  only 
among  the  merchants,  but  among  economists,  that  the 
cheapness  alone  of  an  article  is  the  most  convincing 
factor  in  its  sale.  This  impression  is  distinctly  erroneous 
in  any  article  which  is  a  matter  of  daily  use.  The  common 
sense  of  the  consumer  soon  perceives  that  a  cheap  ar- 
ticle which  does  not  sufficiently  wear  or  endure  is  not 
cheap  after  all,  because  it  requires  such  constant  re- 


38  MERCHANDISING 

plenishment.  It  has  been  well  said  by  an  exceedingly 
shrewd  business  man  of  great  experience  and  keen 
insight  that  "The  recollection  of  quality  remains  long 
after  the  price  is  forgotten."  The  real  truth  is  that  the 
compelling  reason  for  the  purchase  of  such  cheap  com- 
modities as  have  low  prices  for  their  principal  attraction 
is  the  comparative  lack  of  funds  on  the  part  of  most  of 
the  buyers  of  such  goods,  so  that  they  are  unable  to 
pay  for  more  expensive  articles. 

The  second  consideration,  that  of  an  enhancement 
in  price,  is  usually  a  serious  handicap  to  the  sale  of  this 
class  of  articles.  For  then  the  thought  of  the  buyer 
turns  to  somthing  cheaper  that  will  serve  his  purpose 
equally  well.  In  this  particular  instance  such  thought 
shifts  entirely  away  from  the  line  of  enamel  wares  to 
that  of  tin  ware.  Tin  ware  constitutes  a  large  and 
varied  line,  and  is  probably  the  most  democratic  and 
generally  used  of  all  wares,  although  during  the  past 
quarter  of  a  century  its  use  has  been  largely  trenched 
upon  by  the  growing  demand  for  enameled  ware.  The 
reason  for  this  is  partly  physical,  partly  psychological. 

In  the  severe  "  cut  throat"  competition  which  for  many 
years  prevailed  between  the  manufacturers  of  tin  ware 
there  inevitably  ensued  that  short-sighted  and  fatal  mis- 
take of  deterioration  in  quality,  which  usually  marks  and 


ORDERING— REGULAR  GOODS       39 

distinguishes  such  commerical  warfare.  The  natural 
consequence  was  the  shifting  of  a  large  class  of  con- 
sumers to  better  grades  and  qualities  of  other  wares, 
notably  enameled  wares,  which  not  only  gave  satisfaction 
in  use  but  were  attractive  in  appearance.  This  latter  is 
something  which  is  rarely  true  of  tin  ware,  since  its  shiny 
and  unfinished  appearance  is  not  prepossessing.  So 
obvious  did  the  serious  and  far  reaching  effects  of  the 
deterioration  in  tin  ware  become  to  the  manufacturers 
that  some  of  the  wiser  and  far-seeing  ones  made  and 
advertised  a  higher  grade  of  tin  ware,  of  heavier  mate- 
rial, better  and  more  abundantly  tinned,  and  thereby 
established  a  large  and  permanent  trade,  though  the 
prices  of  such  a  grade  of  goods  were  appreciably  higher 
than  those  of  the  depreciated  articles.  The  psychological 
problem  involved  is  one  not  generally  recognized,  usu- 
ally for  lack  of  intelligent  analysis,  but  is  none  the 
less  important.  In  fact  the  mental  side  of  buying  and 
selling  is  often  as  important  and  compelling  as  the 
physical  facts  involved. 

As  before  stated  tin  ware  is  essentially  an  elemental  and 
democratic  commodity.  It  was  the  natural  accompani- 
ment of  pioneer  life  in  this  country,  because  of  its  wearing 
and  enduring  qualities.  Likewise  it  finds  great  use 
among  the  poorer  cjasses  to-day,  with  whom  ready  money 


40  MERCHANDISING 

is  scarce,  and  to  whom  appearances  in  such  matters  are  a 
minor  consideration.  Its  use  in  any  part  of  the  country 
can  be  predicated  in  advance  by  a  knowledge  of  the 
habits,  tendency  of  thought,  traditions,  customs  and 
modes  of  living  of  the  people.  Its  use  in  the  East  is  pro- 
portionally small,  and  this  percentage  of  use  compared  to 
other  wares  increases  progressively  as  you  go  West  and 
South.  It  is  much  used  among  the  negroes  in  the  South 
and  among  the  poorer  classes  of  farmers  in  the  West. 
Yet  in  the  Great  Plains  States,  Kansas,  Nebraska,  and 
Oklahoma,  as  examples,  the  use  is  very  large  even  among 
the  better  educated  and  comparatively  well  to  do.  Nor 
is  the  reason  far  to  seek.  The  inhabitants  of  these  states 
are  not  only  unusually  educated  and  intelligent  on  the 
whole,  but  they  are  entirely  devoid  of  that  affectation 
and  loss  of  simplicity  which  unfortunately  often  accom- 
panies the  acquirement  of  knowledge.  They  are  most 
elemental  and  direct  in  all  their  ways  of  thought,  and  are 
characterized  by  a  breadth  and  scope  of  mental  horizon, 
which  is  in  keeping  with  and  is  largely  the  product  of 
their  physical  environments.  Appearance  with  them 
counts  for  but  little  compared  with  intrinsic  merit.  Thus 
any  study  of  the  mental  peculiarities  of  a  people  fore- 
casts largely  in  what  direction  their  material  wants  are 
likely  to  tend.  So  tin  ware,  when  of  good  quality, 


ORDERING— REGULAR  GOODS       41 

appeals  to  them  because  of  its  simplicity,  economy  and 
serviceability.  The  story  of  tin  ware,  therefore,  points 
the  way  to  an  intelligent  study  and  analysis  of  the 
ways,  manners  and  mental  attitude  of  the  people  of 
any  section  as  to  the  kind  of  goods  they  are  likely  to 
use. 

The  study  of  comparative  prices  discloses  at  once 
that  if  the  cheapest  form  of  enameled  ware  has  ad- 
vanced in  price,  those  of  tin  ware  have  done  likewise 
and  that  the  proportion  of  cost  between  them  re- 
mains much  the  same.  Under  these  conditions  ex- 
perience shows  that  there  will  be  comparatively  small 
shifting  of  demand  from  the  higher  priced  to  the  cheaper 
line  of  goods. 

The  next  problem  as  to  how  the  various  enameled 
wares  in  the  future  will  sell  compared  with  each  other 
is  that  of  choice  of  colors,  as  this  is  of  equal  importance 
between  them  as  compared  with  prices.  The  solution 
to  this  problem  lies  in  the  fact  that  the  users  are  largely 
women.  Now  it  is  a  matter  of  common  knowledge  and 
experience  that  on  the  whole  women  possess  a  truer  and 
more  instinctive  sense  of  the  harmony  of  colors  than  men, 
all  theoretical  psychologists  to  the  contrary  notwithstand- 
ing. It  is  not  surprising,  therefore,  that  the  sales  hi 
general  of  blue  and  white  enameled  ware  are  larger  than 


42  MERCHANDISING 

those  of  any  other  color  or  combination  of  colors.  And 
the  compelling  reasons  for  this  seem  to  be  not  alone  the 
natural  association  of  white  and  blue  in  harmonious 
blending,  but  the  fact  that  most  women  possess  a  set  of 
blue  and  white  china  and  like  things  "to  match."  In 
defiance  and  apparent  ignorance  of  the  fact  that  the 
woman's  taste  in  colors  was  the  principal  factor  to  be 
consulted  in  this  matter  there  have  been  essayed  at 
times  new  combinations  of  incongruous  colors  in  enameled 
ware,  combinations  that  in  feminine  phrase  "screamed 
at  each  other,"  so  utterly  did  they  refuse  to  blend.  Pat- 
terns of  this  description  were  inevitably  failures  from 
the  beginning  and  the  unfortunate  manufacturers  never 
realized  why,  nor  were  conscious  of  their  lack  of  insight 
and  perception.  It  must  be  remembered,  however, 
that  good  taste  is  a  progressive  affair  and  a  matter  of 
education,  and  that  a  generation  which  knows  much 
cultivation  demands  something  more  picturesque  than 
the  simple  combinations  of  colors,  such  as  blue  and  white. 
Hence  there  arose  new  combinations  of  two  or  more 
colors,  not  sharply  defined  nor  mottled,  but  gradually 
shading  into  each  other.  It  was  obvious  from  the  be- 
ginning that  there  would  be  some  demand  for  such 
colored  wares,  but  it  was  not  a  difficult  forecast  for 
those  who  ordered  these  goods  to  do  so  in  moderation, 


ORDERING— REGULAR  GOODS       43 

without  danger  of  overstocking  (being  careful  not  to 
get  overstocked),  because  any  intelligent  analysis  of 
the  situation  brought  our  two  fundamental  facts — one, 
that  those  who  desire  something  more  picturesque  and 
striking  are  necessarily  much  in  the  minority  compared 
to  the  many  who  prefer  homelier  and  simpler  combina- 
tions. The  other  analysis  discloses  the  elemental  fact 
that  in  the  things  of  life  that  are  in  daily  practical  use 
among  the  many  it  is  not  safe  to  attempt  to  carry  the 
matter  of  decoration  and  picturesqueness  to  the  same 
degree  that  is  befitting  articles  of  luxury,  whose  in- 
trinsic value  does  not  lie  so  much  in  their  practi- 
cality as  in  their  appearance.  The  furniture  and  be- 
longings of  a  kitchen  are  not  intended  to  be  so  appealing 
as  those  of  the  dining  room  and  to  attempt  to  make 
them  so  is  apt  to  create  in  time  a  weariness  of  their 
very  picturesqueness. 

Hence  the  practical  conclusion  as  to  the  comparative 
quantities  to  be  ordered  of  blue  and  white  and  of  the 
" shaded"  wares  is  that  while  the  shaded  wares  have  a 
place  of  their  own,  it  is  one  of  less  importance  and  not 
so  popular  as  the  less  pretentious  blue  and  white.  Still 
another  and  comparatively  new  factor  arises  in  the 
ordering  of  what  is  known  as  white  and  white  enameled 
ware,  that  is,  a  ware  that  is  white  both  on  the  outside 


44  MERCHANDISING 

as  well  as  on  the  inside,  since  the  blue  and  white 
shaded  wares  are  colored  on  the  outside,  and  are  white 
only  on  the  inside.  This  subject  will  be  treated  in  the 
next  chapter. 


CHAPTER  VI 

ORDERING — REGULAR   OR   STAPLE    GOODS,    CONTINUED 

For  a  number  of  years  the  sale  of  white  and  white 
ware  had  a  checkered  career  in  this  country.  Most  of 
it  was  imported,  as  it  is  difficult?  and  expensive  to  make 
because  of  the  large  proportion  of  "seconds"  or  im- 
perfect goods.  This  is  due  to  the  fact  that  all  stains  or 
discolorations  or  flaws  of  any  character  show  very 
plainly  upon  the  outside  white  surface,  and  the  goods  so 
affected  cannot  be  sold  as  first  class  articles.  This  high 
cost  limited  their  use  to  a  comparatively  narrow  range 
of  demand.  The  dominant  factor  in  such  demand  was 
largely  psychological  and  based  upon  their  cleanly  and 
sanitary  appearance.  The  fact  that  any  defect  or  discol- 
oration could  not  be  hidden  was  constant  testimony  as 
to  the  thoroughness  of  the  manufacture  and  to  careful  in- 
spection. Naturally  these  wares  found  ready  reception 
in  hospitals,  sick  rooms,  and  all  places  where  their  high 
grade  appealed  to  the  more  intelligent  taste.  They  were 
sold  largely  on  their  merit,  rather  than  on  their  price, 
and  not  being  used  by  all  people  for  all  purposes,  the  as- 
sortment was  naturally  smaller  and  for  comparatively 

45 


46  MERCHANDISING 

few  uses.  Save  in  the  hands  of  careful  housewives,  their 
discoloration  when  used  for  stove  purposes  often  became 
such  as  militated  against  their  general  use  for  such  pur- 
poses. The  problem  then  became  an  understanding  of 
their  natural  limitations  as  to  use,  since  to  order  such 
items  as  are  not  likely  to  sell  save  spasmodically  is  to  ac- 
cumulate useless  and  dead  stock.  Furthermore,  because 
in  the  past,  they  were  largely  imported,  it  became 
necessary  to  anticipate  wants  further  in  advance,  so  that 
orders  for  them  had  to  be  given  in  larger  quantities, 
and  with  a  longer  time  allowed  for  filling  and  receiving 
them  than  in  the  case  of  domestic  goods. 

In  such  cases  there  naturally  cannot  be  the  same 
turnover  of  stock  as  on  domestic  goods,  and  therefore 
this  relative  loss  in  money  making  capacity  must  if 
possible  be  recompensed  by  a  greater  percentage  of 
gross  profit. 

The  problem  of  their  future  sales  whether  greater  or  less 
than  in  the  past,  becomes  simply  one  of  the  increase  of 
good  taste  and  the  spread  of  ideas  and  habits  of  sanitation 
in  this  country.  In  other  words,  they  are  one  of  the  many 
evidences  to  be  found  in  merchandising  of  the  steady 
growth  of  education  and  intelligence  among  the  people 
and,  consequently,  it  is  entirely  safe  to  predicate  the  in- 
creasing use  of  these  goods  within  certain  limitations. 


ORDERING— REGULAR  OR  STAPLE  GOODS      47 

Of  an  entirely  different  character  and  for  an  entirely 
different  reason  is  the  use  of  nickel-plated  on  copper 
ware,  and  yet  the  basis  of  this  use  is  also  largely 
psychological.  It  is  true  that  the  ware  is  substantial  and 
enduring,  but  that  is  not  the  only  compelling  cause  of 
its  employment.  That  cause  is  to  be  found  largely  in 
the  tastes  and  fancy  of  modern  civilization — in  the 
"swell"  hotel  and  restaurant  life  of  the  great  cities, 
in  the  afternoon  teas,  and  midnight  suppers  of  fash- 
ionable and  would-be  fashionable  society,  in  shapes  of 
the  articles,  sometimes  quaint,  sometimes  graceful,  some- 
times grotesque.  Its  various  vessels  appeal  equally  to 
the  bizarre  and  the  artistic  in  human  nature.  Its  com- 
paratively high  price  and  its  very  appearance  bars  it 
from  use  by  the  hydra-headed  many.  It  does  not  lend 
itself  to  universal  use  for  kitchen  and  household  pur- 
poses, but  rather  to  the  things  of  the  table,  the  elegancies 
of  coffee  and  teapots,  of  casseroles,  and  chafing  dishes, 
of  trays  and  samovars. 

Moreover,  anything  nickel-plated,  to  be  presentable, 
has  to  be  constantly  polished,  and  the  busy  house- 
wife is  not  seeking  any  extra  labor  in  that  direction. 
Books,  poems,  and  essays,  always  written  by  men,  tell 
of  the  industrious  housewife  delighting  in  the  toil  of 
constantly  polishing  all  household  utensils  and  keeping 


48  MERCHANDISING 

them  immaculately  clean.  This  sentimentality  may 
have  passed  muster  in  the  Mid-Victorian  period,  but  we 
know  to-day  that  women  dislike  useless  drudgery  as 
much  as  men  and  gladly  seek  means  of  escape  from 
such  vain  labor.  This  is  easily  apparent  in  the  steadily 
growing  sale  of  all  those  various  labor  saving  devices  in 
household  affairs,  which  have  done  so  much  to  make  the 
housewife's  job  more  tolerable. 

The  story,  therefore,  is  one  of  careful  watching  of 
the  various  styles  of  the  more  ornamental  items  of 
nickel-plated  ware,  since  nothing  is  more  fickle  and 
unreasoning  than  the  tastes  and  fancies  of  those  to  whom 
" style"  in  anything  is  an  important  characteristic.  On 
the  other  hand,  there  will  probably  always  be  a  steady 
demand  for  the  staple  items,  because  they  serve  a  useful 
and  enduring  purpose.  Naturally  enough,  however, 
the  demand  for  this  class  of  goods  was  much  curtailed 
by  the  abnormally  high  prices  which  prevailed  among 
them  as  one  of  the  effects  of  the  European  War.  This  is 
a  problem  which  constantly  confronts  the  orderer  of 
goods  as  to  the  opposite  effects  of  low  and  high  prices 
upon  the  demand  for  different  articles. 

It  is  perfectly  true  as  a  general  statement  that  low 
prices  increase  consumption  and  high  prices  curtail  it, 
but  like  all  generalities  such  a  statement  is  often  mis- 


ORDERING— REGULAR  OR  STAPLE  GOODS       49 

leading,  and  the  only  safe  course  is  to  analyze  all  the 
conditions  surrounding  each  particular  article.  As  a 
matter  of  experience  eras  of  high  prices  are  always  those 
of  great  demand,  while  the  prevalence  of  low  prices  is 
invariably  coincident  with  much  curtailment  of  business 
activities.  The  answer  to  this  apparently  contradictory 
statement  is  that  demand  and  supply  are  practically 
the  controlling  factors  in  price  fluctuations.  It  is  the  de- 
mand which  causes  high  prices.  Equally  is  it  the  lack 
of  demand  which  causes  low  prices.  There  is  likewise 
the  element  of  speculation  in  times  of  advancing  prices, 
when  merchants  buy  not  only  for  their  wants,  but  also 
that  they  may  reap  a  profit  from  the  appreciating  prices. 
In  such  a  condition  the  surest  way  to  check  the  busi- 
ness activity  which  causes  prices  to  rise,  and  which  con- 
sequently stimulates  production,  is  to  reduce  prices. 
This  invariably  marks  the  end  of  a  "boom"  period, 
and  the  result  is  at  once  a  cessation  of  all  buying  save 
for  absolute  necessities.  The  buying  attitude  on  the  part 
of  the  merchant  becomes  that  of  caution.  He  hesitates 
to  purchase,  lest  he  find  a  lower  price  prevailing  be- 
fore he  disposes  of  the  goods  thus  purchased.  So  the 
situation  drifts  steadily  downward  because  of  general 
caution  and  lack  of  confidence  in  the  future,  until  the 
bottom  is  reached  and  this  point  is  characterized  by 


50  MERCHANDISING 

a  plentiful  lack  of  buying  power  in  general  and  the 
almost  universal  opinion  that  still  lower  figures  por- 
tend. Yet  in  normal  times,  when  there  is  no  decided 
general  drift  of  prices,  low  prices  as  a  rule  increase  de- 
mand, while  high  prices  have  the  opposite  effect.  This 
is  an  important  fact  in  merchandising,  which  will  be 
treated  at  more  length  in  the  chapter  on  Selling. 

The  consideration  of  the  final  variety  of  household 
wares — Aluminum  ware — has  many  analogies  to  white 
and  white  ware,  in  that  one  of  its  principal  appeals  lies 
in  its  sanitary  and  cleanly  appearance.  Added  to  this 
is  its  extreme  lightness  combined  with  great  strength. 
There  was  originally  a  generally  prevalent  idea  that  it 
would  not  discolor  or  oxidize,  which  of  course  is  not 
true  of  any  metal,  since  oxidation  in  metals  differs 
in  degree  and  not  in  kind.  This  oxidation  and  dis- 
coloration in  aluminum  ware  is  but  slight,  yet  when  fully 
realized  exercises  a  somewhat  unfavorable  effect  upon 
the  users.  The  exceedingly  high  price  which  this  ware 
attained  during  the  European  War  was  also  a  deterrent 
upon  its  sales  for  the  time  being.  A  feature  of  this 
ware,  which  is  common  to  most  merchandise,  is  the 
value  to  the  merchant  of  an  advertised  line  as  one 
easily  sold,  because  better  known. 

In  ordering  such  lines  there  has  always  to  be  borne 


ORDERING— REGULAR  OR  STAPLE  GOODS       51 

in  mind  that  while  liberal  orders  can  safely  be  made  for 
them  while  the  advertising  campaign  continues  and 
thus  furnishes  a  stimulant  to  demand,  experience  shows 
that  demand  will  begin  to  fall  off  perceptibly  if  the  ad- 
vertising be  discontinued.  This  will  be  treated  more 
fully  in  the  chapter  on  Advertising. 

The  conclusion  about  ordering  aluminum  ware  is 
much  the  same  as  to  white  and  white  ware  and  for  much 
the  same  reason,  only  that  it  has  a  much  more  extended 
and  varied  use,  and  will  probably  grow  faster  and  in 
general  favor. 

Reverting  to  some  of  the  other  elements  of  the  sup- 
posititious order,  which  is  to  be  placed  for  blue  and 
white  ware,  there  arises  the  question  as  to  the  ease  or 
difficulty  of  getting  prompt  and  complete  shipments. 
The  answer  to  this  involves  a  knowledge  of  the  facts 
that  before  the  European  War  there  was  much  enameled 
ware  imported  from  Europe,  and  that  such  importa- 
tions have  practically  ceased,  thus  casting  the  burden 
of  supplying  this  demand  entirely  upon  the  American 
manufacturers,  that  the  latter  have  had  great  difficulty 
in  procuring  adequate  machinery  and  material  for  new 
buildings  where  they  desired  to  enlarge  their  plants; 
also  that  the  scarcity  of  labor  has  largely  prevented  such 
additions  to  their  productive  capacity;  that  they  have 


52  MERCHANDISING 

experienced  much  trouble  and  delay  in  procuring  ade- 
quate supplies  of  sheet  steel,  which  furnishes  the  body 
of  the  utensils  on  which  the  enameling  is  then  coated; 
that  the  railroads  in  general,  because  of  inadequate 
facilities  and  insufficient  equipment,  and  because  of 
the  great  congestion  of  traffic,  have  been  unable  to 
furnish  cars  promptly  to  manufacturers,  or  to  trans- 
port them,  when  loaded,  expeditiously  to  their  destina- 
tions. It  is  evident,  therefore,  under  these  conditions 
that  the  shipments  of  enameled  ware  by  the  factories 
will  be  much  delayed,  as  will  also  their  receipt  when  once 
shipped.  It,  therefore,  is  the  part  of  wisdom  to  place  as 
liberal  orders  as  the  previous  sales  indicate  to  be  proper 
and  for  immediate  shipment,  and  for  a  longer  period  in 
advance  than  if  the  conditions  were  such  that  prompt 
and  complete  shipments  could  be  expected  from  manu- 
facturers and  quick  transportation  by  the  railroads. 
Nor  must  there  be  an  unreasoning  placing  of  such 
orders  on  the  exact  basis  of  sales  for  any  comparative 
period,  either  in  the  near  or  distant  past.  For  there 
must  be  an  intelligent  analysis  of  the  general  busi- 
ness conditions  existing  at  the  time  the  order  is  placed, 
and  those  in  the  past  which  have  been  selected  for  pur- 
poses of  comparison,  and  the  orders  must  be  greater  or 
less,  according  as  to  whether  the  present  business  con- 


ORDERING— REGULAR  OR  STAPLE  GOODS       53 

dition  and  outlook  is  better  or  worse  than  in  times 
preceding.  This  implies  the  possession  of  such  knowl- 
edge as  makes  the  comparison  of  genuine  value.  There 
must  also  be  an  intelligent  study  of  the  conditions  and 
likelihoods  surrounding  each  individual  item  in  the  line 
of  blue  and  white  enameled  ware  which  is  being  ordered. 
It  will  be  found  as  a  matter  of  general  observation 
that  cups  are  more  and  more  being  used  in  place  of 
dippers,  probably  because  cups  are  handier  and  do  not 
occupy  so  much  space.  It  will  be  noted  that  stove 
furniture  articles  used  in  connection  with  Number  7 
cook  stoves  shows  a  steady  decrease  from  year  to  year. 
This  is  caused  by  the  fact  that  Number  7  stoves  are 
the  small  size  and  not  so  convenient  and  comprehensive 
in  their  service  and  possibilities  as  the  larger  sizes, 
Numbers  8  and  9.  Consequently,  because  of  the  growth 
of  the  country  in  wealth  and  its  consequent  general 
desire  for  better  things,  the  small  stove,  restricted  in 
its  service  possibilities,  is  being  replaced  by  the  larger 
and  more  efficient  stoves.  In  such  cases,  however, 
ordering  the  Number  7  stove  furniture  must  not  be 
on  the  basis  of  the  decreasing  proportion  of  sales  shown 
in  the  past,  but  on  a  much  smaller  ratio.  The  reason 
for  this  is  that  fewer  and  fewer  Number  7  stoves  are 
being  made  each  year  and  that  much  of  the  demand  for 


54  MERCHANDISING 

Number  7  stove  furniture  comes  from  old  stoves  al- 
ready in  existence,  and  that  when  those  stoves  are  used 
up  the  great  majority  of  them  will  be  replaced  with  the 
larger  numbers. 

It  is  an  axiom  in  merchandising  when  an  article  be- 
gins to  go  out  of  use  that  the  part  of  wisdom  is  to  order 
it  more  and  more  sparingly  as  it  approaches  its  final 
dissolution,  and  thus  to  anticipate  its  end,  and  not  be 
finally  caught  with  a  large  stock  of  unsalable  goods  on 
hand.  It  must  also  be  learned  in  what  section  there 
still  persists  a  demand  in  this  case  for  this  small  sized 
stove.  The  result  as  ascertained  indicates  the  South 
and  the  immediate  answer  is  that  it  is  only  a  question 
of  a  short  time  when  there  will  be  but  few  of  these  stoves 
made  or  used.  The  reason  for  its  use  in  the  South  tells 
in  a  few  words  the  history  of  that  section.  Stricken 
and  impoverished  by  the  war  and  the  ensuing  Re- 
construction, its  buying  power  for  many  years  was  con- 
fined to  the  cheapest  and  most  necessary  things  of  life. 
Moreover,  this  was  accentuated  by  the  presence  of  a 
vast  number  of  negroes,  whose  wants  were  the  simplest. 
The  Number  7  stove  instance  also  points  to  the  curious 
fact  that  apparently  because  of  inherent  conservatism 
the  use  of  certain  articles,  called  "old  fashioned"  for 
lack  of  a  better  name,  perseveres  in  certain  districts, 


ORDERING— REGULAR  OR  STAPLE  GOODS       55 

notably  portions  of  the  South,  the  Philadelpha  dis- 
trict, some  sections  of  the  Appalachian  Mountains 
and  some  of  the  rural  districts  in  New  England,  long 
after  they  have  died  out  in  other  parts  of  the  country. 
Consequently  this  must  be  considered  in  ordering  so 
long  as  this  use  continues.  In  this  instance,  it  is  an  easy 
prophecy  that  the  day  of  tradition  and  conservatism  in 
economic  matters  is  fast  passing  in  the  South,  because 
of  the  great  advancement  of  that  section  in  wealth  and 
development,  and  this  fact  must  also  be  taken  into  ac- 
count in  ordering  "old  fashioned"  goods,  formerly  much 
in  favor  in  that  part  of  our  country. 

This  same  study  must  be  given  to  each  article  in  the 
long  line  of  blue  and  white  enameled  ware  before  the 
order  can  be  intelligently  placed.  It  will  be  seen  from 
what  has  gone  before  that  the  ordering  of  so  apparently 
insignificant  a  matter  as  a  pattern  and  style  of  house- 
hold utensils  involves  a  far  reaching  and  comprehensive 
study  of  many  matters.  Such  a  conclusion  is  not  the 
result  of  a  single  sitting,  but  the  gradual  evolution  of 
experience  and  study.  Most  of  all  it  is  the  consequence 
of  a  constructive  analysis  which  endeavors  to  exhaust 
the  possibilities  of  each  situation  by  the  processes  of  in- 
duction and  deduction.  In  time  the  application  of  such 
results  to  the  problem  in  hand  of  ordering  becomes  as 


56  MERCHANDISING 

ready  and  instantaneous  as  the  deft  handling  of  a  dif- 
ficult operation  by  the  skilled  surgeon.  Moreover, 
every  line  of  goods  in  every  business  offers  the  same  op- 
portunity, in  more  or  less  degree,  for  like  intelligent 
analysis  and  study. 


CHAPTER  VH 

ORDERING — SEASONABLE  GOODS 

All  the  phases  of  ordering  regular  goods  and  many 
more  besides  are  found  in  seasonable  goods,  because  of 
the  peculiar  nature  of  the  goods  themselves.  Season- 
able goods  are  those  which  are  used  entirely,  or  largely, 
at  certain  seasons  of  the  year.  In  the  last  analysis  the 
reason  why  they  are  seasonable  and  in  demand  being 
due  to  the  weather  prevailing  at  such  seasons. 

Lawn  mowers  are  used  in  spring  and  summer,  be- 
cause warm  weather  and  spring  showers  cause  the  grass 
to  show.  Tennis  goods  are  used  in  spring,  summer  and 
fall,  because  the  severity  of  winter  usually  puts  an  end 
to  this  form  of  exercise.  The  selling,  buying  and  order- 
ing of  these  goods,  however,  far  antedates  their  use,  for 
between  their  manufacture,  distribution,  and  use  by  the 
consumer  a  long  period  of  many  months  necessarily 
elapses.  No  sooner  does  one  season  end  than  prep- 
arations for  another  commence.  This  and  all  succeed- 
ing actions  are  best  illustrated  by  concrete  examples 
of  what  are  known  in  the  hardware  business  as  "Plow 

Goods"  and  " Steel  Goods"  which  broadly  comprehend 

57 


58  MERCHANDISING 

those  hand  agricultural  tools,  implements  and  nec- 
essary appurtenances,  such  for  example  as  scythe  stones 
for  sharpening  scythes,  used  in  the  planting,  culti- 
vation and  harvesting  of  the  crops.  The  season  for  the 
use  of  these  goods  varies,  first  according  to  latitude  and 
secondly  according  to  the  nature  of  the  goods. 

Cotton  hoes  are  used  in  the  far  South  late  in  Feb- 
ruary, while  hay  forks  are  used  in  Northern  latitudes 
as  late  as  August.  The  season  however  for  the  sale 
of  all  these  articles  is  practically  over  in  August,  and 
manufacturers  from  that  time  on  make  preparations  for 
the  coming  season  by  presenting  to  the  jobbers  a  schedule 
of  prices  and  terms  on  all  lines  of  these  goods.  There 
is  usually  a  contract  entered  into  between  the  man- 
ufacturer and  jobber,  not  only  as  to  prices,  which 
generally  prevail  unchanged  throughout  the  coming 
season,  but  also  as  to  approximate  quantities  of  dif- 
ferent items,  since  the  manufacturer  endeavors  to 
arrange  as  far  as  possible  in  advance  for  the  disposal  of 
his  entire  possible  output,  or  else  to  get  some  idea  as  to 
how  many  goods  it  will  be  necessary  for  him  to  pro- 
duce during  the  coming  season.  The  jobber's  prob- 
lem is  much  more  complex,  for  into  it  there  enters 
not  only  all  the  factors  affecting  the  sale  and  ordering 
of  regular  goods  but  likewise  such  unknown  quantities 


ORDERING— SEASONABLE  GOODS  59 

as  the  nature  of  the  weather  and  the  probable  price  of 
farm  products  from  six  to  eight  months  in  the  future,  all 
of  which  must  be  anticipated  and  given  consideration. 
The  record  of  past  sales  is  less  approximately  correct 
as  a  guide  than  in  the  case  of  regular  goods.  For  in 
some  items,  notably  lawn  mowers,  the  sales  vary  as 
much  as  50%  from  one  season  to  another  because  of 
like  variations  in  the  weather.  A  matter  of  much  moment 
in  this  connection  is  that  of  "terms  and  datings." 
It  is  necessary  for  the  manufacturer  to  make  seasonable 
goods  many  months  in  advance  of  their  actual  use  by 
the  consumer.  The  jobber  (or  wholesaler)  in  turn  must 
have  them  in  stock  next,  in  order  that  he  may  sell  to  the 
retail  dealer  in  time  for  the  latter  to  have  them  on  hand 
for  the  consumer  when  the  proper  season  for  their  use 
comes  around.  Practically  no  manufacturer  can  afford 
the  warehouse  space  necessary  for  the  storage  of  agricul- 
tural implements  and  plow  goods  and  similar  bulky 
goods,  from  the  time  he  commences  their  manufacture 
in  early  summer  until  they  are  put  into  use  the  next 
spring.  So  he  ships  the  goods  to  the  various  wholesalers 
in  these  lines,  beginning  in  early  fall  and  continuing  into 
early  winter,  thus  distributing  their  storage  over  a  large 
time  and  area.  The  jobber  accepts  the  goods  only  with 
the  understanding  that  he  does  not  have  to  pay  for  them 


60  MERCHANDISING 

when  received,  and  thus  avoids  having  his  capital  locked 
up  unproductively  until  the  time  comes  for  him  to  sell 
the  goods  to  the  retailer.  He  realizes,  moreover,  that 
the  prime  object  is  to  get  the  goods  early  so  as  to  be  sure 
to  have  them  when  needed.  The  manufacturer  therefore 
gives  the  jobber  what  are  known  as  special  terms  and 
datings.  They  vary  greatly  in  different  branches  of 
business,  according  to  the  nature  of  the  goods  and  pre- 
vailing custom.  One  of  the  simplest,  as  related  to  hand 
agricultural  implements,  is  that  the  goods  shall  be  shipped 
during  the  fall  and  early  winter,  but  shall  not  be  payable 
until  the  following  March  or  April,  or  May,  as  the  case 
may  be.  The  wholesalers  then  shift  the  burden  of  storage 
and  of  financial  responsibility  to  the  retail  dealers  by 
giving  them  practically  the  same  terms  and  datings  as 
the  wholesalers  receive  from  the  manufacturers.  The 
retailers,  however,  do  not  take  the  goods  from  the  jobbers 
until  late  fall  and  into  early  spring.  The  wholesaler  can 
afford  to  order  these  goods,  under  the  terms  and  datings, 
for  earlier  shipment  and  in  larger  quantities  than  if  he 
paid  cash  for  them  when  received,  and  thus  bought 
them  in  the  regular  way.  From  the  time  shipments 
commence  until  the  bills  fall  due  in  the  following  spring, 
there  is  no  expenditure  of  capital  involved  and  the  only 
"carrying  charges,"  as  they  are  called,  are  those  of  in- 


ORDERING—SEASONABLE  GOODS  61 

surancej  rent  and  taxes  for  in  such  cases  because  of  the 
short  period,  depreciation  in  the  quality  of  the  goods 
is  a  negligible  quantity. 

Among  the  seasonable  goods  earliest  used  by  the  con- 
sumer are  cotton  hoes,  for  cultivating  cotton.  They  are 
consequently  ordered  earlier  by  both  jobber  and  retailer 
than  those  implements,  whose  use  comes  later  in  the 
year.  .  Their  sale  depends  primarily  upon  the  probable 
amount  of  acreage  which  will  be  planted  to  cotton  during 
the  coming  spring.  For  it  must  be  remembered  that 
this  supposititious  order  is  being  placed  by  the  jobber  in 
August,  or  six  months  before  the  goods  are  to  be  used. 
The  acreage  likely  to  be  devoted  to  cotton  will  naturally 
depend  upon  the  probable  demand,  not  only  when  cotton 
is  planted,  but  also  when  it  is  picked  and  marketed  many 
months  later,  or  practically  a  year  and  even  later  from 
the  time  when  the  order  for  cotton  hoes  is  placed. 
Any  large  prospective  demand  for  cotton  naturally 
creates  a  good  price  for  it  when  the  demand  materializes, 
and  this  is  the  compelling  cause  which  induces  the  farmers 
to  plant  a  large  acreage  of  cotton  in  the  spring.  The 
fluctuations  in  the  amount  of  acreage  devoted  to  cotton 
year  by  year  received  striking  illustrations  within  the 
past  ten  years  as  the  price  of  cotton  rose  or  declined. 
The  invasion  of  the  boll  weevil  caused  much  less  cotton 


62  MERCHANDISING 

to  be  planted,  and  this  tendency  reached  its  lowest  ebb 
in  the  spring  of  1915  when  the  European  war  shut  off 
a  large  export  demand  for  cotton,  and  the  resulting 
acreage  planted  in  the  spring  of  1915  was  the  smallest 
in  many  years.  Consequently  orders  for  cotton  hoes 
placed  in  the  late  summer  and  fall  of  1914  recognized  this 
easily  perceived  tendency  and  were  correspondingly  re- 
duced in  quantity.  The  steady  rise  in  the  price  of  cotton 
during  1915  clearly  presaged  a  larger  acreage  in  the  spring 
of  1916,  and  therefore  called  for  larger  anticipatory 
orders  for  cotton  hoes.  This  rising  price  of  cotton  con- 
tinued during  1916  and  1917,  with  consequent  increased 
use  of  cotton  hoes  as  a  result  of  a  larger  planting  of  cotton. 
At  this  writing,  September,  1917,  the  problem  of  the 
amount  of  cotton  hoes  is  exceedingly  simple,  there  being 
no  doubt  that  the  acreage  to  be  planted  in  cotton  in 
the  spring  of  1918  will  be  unusually  large,  thus  calling 
for  a  very  large  use  of  cotton  hoes.  Cotton  is  now  selling 
at  very  high  figures,  because  of  two  short  crops  in  succes- 
sion. It  is  very  certain  that  the  present  growing  crop 
will  not  be  more  than  one  of  moderate  yield  in  any  event. 
If  the  war  continues,  the  situation  will  remain  practically 
unaltered  as  affecting  the  price  of  cotton.  If  peace  comes, 
the  price  of  cotton  will  probably  reach  unprecedentedly 
high  figures,  because  of  the  reopening  of  old  export 


ORDERING— SEASONABLE  GOODS  63 

channels,  and  consequently  a  large  demand  from  those 
European  nations  who  were  unable  to  obtain  cotton 
during  the  war.  These  facts  are  constantly  present  in 
the  minds  of  the  farmers,  who  therefore  will  be  eager 
to  take  advantage  of  an  unusual  opportunity  for  profit 
by  raising  as  much  cotton  as  possible.  It  will  be  seen, 
therefore,  that  the  amount  of  cotton  hoes  to  be  ordered 
in  advance  demands  for  its  intelligent  determination  a 
careful  study  of  all  the  world  wide  factors  affecting  the 
price  of  cotton,  and  likewise  the  probable  trend  of  these 
factors  during  the  six  months  and  more  to  come. 

It  will  be  thus  apparent  as  a  broad  principle  that  the 
demand  for  agricultural  implements  used  in  the  great 
staple  products  is  largely  affected  by  the  price  of  these 
products,  and  whether  such  prices  are  remunerative  or 
otherwise  to  the  farmers.  One  of  the  distinctions  in  hoes 
is  that  most  of  them  are  sold  complete  with  handles, 
while  a  small  minority — used  mostly  in  the  South  and 
Latin-American  countries — are  without  handles,  and 
are  generally  known  as  eye  hoes.  In  ordering  the  lat- 
ter, study  and  investigation  reveal  the  fact  that  they  are 
an  inheritance  from  the  crude  ways  of  the  past,  when 
the  user  of  the  hoe  preferred  to  "handle"  his  own 
hoe.  Obviously  an  "unhandy"  matter  of  this  kind 
must  give  way  to  the  convenience  and  simplicity  of 


64  MERCHANDISING 

the  handled  hoe,  and  consequently  in  ordering  eye 
hoes,  the  records  of  past  sales  are  not  a  safe  guide, 
unless  the  orderer  always  bears  in  mind  the  facts  of  the 
situation,  and  each  year  orders  a  smaller  proportion  then 
the  year  before.  In  a  case  of  this  kind,  there  finally 
comes  a  tune  when  it  becomes  wise  to  "close  out"  such 
goods,  as  the  trade  phrase  goes,  by  ceasing  to  order 
them,  and  by  disposing  of  those  on  hand.  It  is  very 
expensive  to  be  caught  with  a  large  stock  of  goods  of  this 
nature  on  hand  when  the  demand  for  them  has  fallen 
to  small  proportions,  since  the  sale  has  to  be  forced  and 
the  goods  sold  at  any  price  that  can  be  obtained  for  them. 
The  farsighted  policy  consists  therefore  in  anticipating 
the  inevitable  and  "closing  out"  such  goods  while  op- 
portunity still  offers,  rather  than  waiting  for  them  to 
die  a  natural  death.  It  is  an  axiom  of  good  merchan- 
dising to  take  such  losses  early,  for  the  longer  the  mer- 
chant waits  the  more  difficult  it  is  to  dispose  of  such  ar- 
ticles, and  the  severer  the  loss. 

One  feature  of  ordering  seasonable  goods  is  of  the  ut- 
most importance  to  the  jobber,  but  is  often  overlooked. 
It  consists  in  learning  as  the  extent  of  unsold  stocks  of 
seasonable  goods  in  the  hands  of  the  retailers,  which 
were  carried  over  from  the  previous  season.  For  to  the 
extent  that  the  retailers  have  such  goods,  to  that  ex- 


ORDERING— SEASONABLE  GOODS  65 

tent  they  will  not  make  purchases  of  new  goods  for  the 
coming  season.  If  for  instance,  for  any  cause,  there  is  at 
present  a  large  stock  of  cotton  hoes  in  the  hands  of  re- 
tailers, which  they  bought  for  last  season's  business  and 
failed  to  dispose  of,  then  they  will  buy  a  correspondingly 
smaller  number  of  cotton  hoes  for  the  coming  season 
than  if  they  had  not  carried  over  any  at  all.  This  fact 
brings  up  another  in  its  train.  The  prospective  sale  of 
goods  which  does  not  eventuate  because  of  unfavorable 
weather  during  a  portion  of  the  season,  practically  never 
takes  place,  no  matter  how  favorable  the  season  may  be. 
In  the  language  of  the  trade,  it  is  "water  over  the  dam" 
and  is  lost  for  that  season.  If  for  instance  the  month 
of  May  is  so  very  dry  that  the  sale  of  lawn  mowers  is 
restricted  accordingly,  that  restricted  sale  will  not  be 
made  up  to  any  extent  no  matter  how  wet  and  favorable 
June  may  be.  The  dealer  who  orders  his  goods  on  a 
basis  of  merely  delayed  sales  will  be  apt  to  have  them  on 
his  hands  at  the  end  of  the  season. 

Among  hand  agricultural  implements,  which  illus- 
trate two  interesting  phases  of  ordering  in  seasonable 
goods,  are  grain  scythes.  The  principal  factors  in  their 
case  are  the  weather  and  their  growing  disuse.  Taking 
the  latter  phase  first,  they  are  steadily  being  supplanted 
by  the  reaping  machine  until  their  use  is  largely  one  of 


66  MERCHANDISING 

very  small  farms,  and  certain  conditions  of  weather,  such 
as  rainfall  during  harvesting.  In  ordering,  their  growing 
disuse  must  be  taken  into  account  by  a  lessening  propor- 
tion of  quantities.  The  weather  would  seem  to  be  an  insol- 
uble problem,  seeing  that  the  United  States  Weather  Bu- 
reau does  not  attempt  to  forecast  weather  conditions 
beyond  a  week's  time,  and  in  this  latter  case  only  in  a 
tentative  and  approximate  way.  All  would-be  prophets 
who  confidently  foretell  the  details  of  the  weather  months 
in  advance  are  mere  conscienceless  fakirs,  trading  on 
the  credulity  and  ignorance  of  human  nature.  Yet  in 
the  ordering  of  goods  in  the  August  of  one  year  to  be 
used  from  the  spring  to  the  summer  of  the  next  year, 
the  weather  plays  an  imporant  part  in  the  use  of  these 
goods,  and  as  long  therefore  as  the  quantities  of  goods 
in  these  orders  are  based  largely  upon  the  weather, 
there  should  be  some  intelligent  effort  to  approxi- 
mately forecast  such  weather,  at  least  within  the  bounds 
of  probability.  Such  an  effort  in  the  first  instance 
necessitates  a  careful  study  of  weather  records  for 
a  period  of  fifty  years  back,  as  that  seems  to  be  the 
cycle,  roughly  speaking,  in  which  all  phases  of  weather 
occur  with  uncertain,  yet  relentless  irregularity.  This 
study  dispels  the  prevalent  yet  erroneous  impression  of 
a  permanent  change  in  climatic  conditions  during  any 


ORDERING— SEASONABLE  GOODS  67 

period  of  human  history.  Both  geology  and  astronomy 
tell  of  a  steady  though  imperceptible  change  in  the 
weather  as  one  of  the  phases  of  our  earth's  existence, 
but  it  is  so  slow  as  to  be  inappreciable  in  recorded  time. 
This  study  also  develops  the  natural,  though  generally 
unnoticed  tendency,  common  to  all  things  in  nature, 
of  similar  kinds  of  weather  to  flock  together.  It  is  much 
the  story  of  the  dream  interpreted  by  Joseph  in  the 
Old  Testament  of  the  seven  lean  years  followed  by 
seven  fat  years.  In  certain  sections  of  the  West  it 
can  be  foretold  with  a  fair  degree  of  certainty  that 
there  will  not  be  more  than  three  years  of  dry  weather, 
nor  more  than  two  years  of  wet  weather  in  succession, 
though  this  rule  is  not  invariable.  It  also  develops  in 
certain  other  sections  if  the  June  rains  continue  along 
well  into  the  early  part  of  July,  that  the  danger  of  a 
severe  prolonged  drought  is  remote;  while  on  the  con- 
trary should  they  cease  early  in  July,  the  likelihood  is 
for  a  succeeding  long,  dry,  hot  spell.  Again,  though 
wet  years  are  apt  to  be  associated,  as  are  dry 
years,  in  such  years  there  is  much  variation  in  the 
amount  and  quantity  of  the  wetness  and  the  dryness. 
If  for  instance  in  North  latitude  40°  in  the  Middle 
West  there  was  unusual  precipitation  during  the  har- 
vesting of  winter  wheat  in  one  year,  the  strong  prob- 


68  MERCHANDISING 

abilities  are  that  it  will  be  in  much  less  amount  the 
next  season.  This  fact  has  for  instance  to  be  taken 
into  account  in  the  amount  of  grain  scythes  to  be  ordered. 
An  actual  happening  in  the  matter  of  another  line  of 
seasonable  goods,  ice  cream  freezers,  illustrates  an- 
other phase  of  the  problem.  A  few  years  ago  a  drought 
commenced  early  in  July,  when  the  spring  rains  ceased, 
and  continued  well  into  August,  being  very  hot  and 
dry  throughout  the  greater  part  of  both  months.  The 
consequence  was  an  unusually  heavy  and  late  sale  of 
ice  cream  freezers  far  into  August,  when  generally  the 
season  for  them  is  over  by  August  ist.  Next  year  was 
also  a  dry  year,  but  the  drought  commenced  early  in 
May  in  the  latitude  in  question.  From  experience  and 
study  of  the  weather  records  the  orderer  of  ice  cream 
freezers  was  able  to  fqrecast  with  great  deflniteness  that 
the  sales  of  ice  cream  freezers  would  be  much  earlier 
than  the  preceding  season,  and  would  cease  much  sooner, 
as  the  rains  which  in  the  previous  years  came  in  Sep- 
tember would  this  year  probably  come  early  in  August, 
consequently  the  sales  records  of  heavy  sales  of  ice 
cream  freezers  in  August  must  be  disregarded  entirely 
this  season.  The  facts  bore  out  faithfully  the  truth  of 
his  forecast.  It  was  merely  a  case  of  shifting  the  time 
of  the  drought  of  which  the  dry  May  gave  him  timely 


ORDERING— SEASONABLE  GOODS  69 

warning.  The  same  orderer  was  also  able  to  forecast 
a  much  larger  sale  of  corn  knives — another  seasonable 
article,  because  of  this  same  experience  with  the  weather 
happenings. 

Corn  knives  are  used  to  cut  corn,  generally  before  it 
matures  and  for  the  purpose  of  using  the  stalk,  ears, 
leaves  and  all  as  feed  for  livestock,  instead  of  utilizing 
only  the  grain  on  the  ears  as  is  generally  done.  It  is 
also  frequently  cut  when  a  drought  threatens  to  be 
unduly  prolonged,  and  prevent  the  corn  from  coming 
to  maturity.  Consequently  corn  knives  are  used  more 
in  dry  than  in  wet  summers.  The  factor  of  weather, 
however,  is  not  the  only  one,  nor  the  one  of  most  moment 
in  the  use  of  corn  knives,  and  correct  and  intelligent 
ordering  of  these  simple  implements  is  a  salient  example 
of  the  necessity  of  the  orderer  keeping  posted  in  all  the 
progressive  matters  relating  to  the  goods  he  orders.  Of 
late  years,  corn  is  being  largely  cut  by  machinery  in  the 
shape  of  a  corn  binder,  which  is  more  effective  and  more 
economical  than  doing  this  work  of  cutting  and  binding 
by  hand.  The  use  of  corn  knives  is  thus  gradually 
being  curtailed.  Other  factors  in  the  use  of  corn  knives 
are  the  growing  use  of  silos,  where  the  entire  corn  plant 
is  cut  up  and  packed  into  the  silo  as  feed  for  livestock 
during  the  winter,  thus  saving  the  waste  which  results 


70  MERCHANDISING 

from  allowing  the  plant  to  die  and  dry  up  in  the  field, 
leaving  only  the  grain  as  feed.  The  use  of  silos  con- 
sequently increases  the  practice  of  cutting  corn,  and 
thus  to  some  extent  the  use  of  corn  knives. 

Another  factor  is  the  yield  of  hay.  When  hay  is  cheap 
and  plentiful,  corn  is  not  cut  so  freely,  because  the  other 
principal  food  for  livestock — hay —  makes  this  cutting 
of  corn  less  necessary.  When  the  hay  crop  is  short, 
then  recourse  is  had  to  corn  cutting  to  supply  the  de- 
ficiency. It  will  thus  be  seen  that  the  intelligent  order- 
ing of  comparatively  unimportant  implements,  such  as 
corn  knives,  implies  the  study  and  knowledge  of  certain 
weather  conditions,  agricultural  conditions,  and  indus- 
trial conditions  as  expressed  in  farm  machinery. 

The  ordering  of  refrigerators,  or  ice  boxes,  or  chests, 
as  they  are  often  called,  is  primarily  dependent  upon 
the  weather,  and  in  the  respect  of  seasons  they  are 
strongly  akin  to  ice  cream  freezers,  though  their  season 
is  somewhat  longer,  and  they  sell  in  a  scattered  way  all 
through  the  year.  As  in  the  case  of  ice  cream  freezers 
the  demand  for  them  is  greatest  in  hot,  dry  weather, 
and  least  in  cool,  wet  weather,  so  that  orders  placed 

far  in  advance  of  their  actual  use  must  forecast  as  far 

• 

as  possible  the  likelihood  of  the  coming  summer.  Not 
so  long  ago  the  character  of  the  weather  in  the  winter 


ORDERING— SEASONABLE  GOODS  71 

preceding  their  use  was  a  vital  factor  in  their  use.  If 
the  winter  was  cold  and  ice  plentiful,  and  consequently 
cheap,  the  demand  for  refrigerators  during  the  coming 
summer  was  consequently  increased.  If,  however,  the 
winter  was  open  or  the  snowfall  so  heavy  that  the 
gathering  of  natural  ice  was  accordingly  hampered, 
the  use  of  refrigerators  was  more  or  less  restricted 
by  the  ensuing  high  price  of  ice.  This  factor  has  be- 
come one  of  diminishing  importance,  since  the  great 
and  growing  output  of  artificial  ice.  As  they  are  re- 
ceptacles and  storage  places  for  a  brief  time  for  food, 
the  factor  of  sanitation  is  an  important  one  in  their  use 
and  demand.  When  the  white  tiled  and  white  inside 
painted  refrigerators  came  into  vogue,  it  was  evident 
to  the  intelligent  orderer  that  the  appeal  of  cleanly  and 
sanitary  appearance  in  the  new  style  refrigerators  would 
bring  them  into  general  favor,  as  compared  with  the 
older  styles  lacking  in  such  an  appeal,  and  he  changed 
the  proportion  of  his  orders  accordingly. 

The  use  of  screen  wire  cloth  is  based  largely  to-day 
on  this  appeal  to  modern  sanitary  instincts.  It  is  not 
alone  the  relief  from  the  annoyance  of  insects,  which 
the  use  of  this  article  brings,  but  the  cultivated  instinct 
that  we  are  also  avoiding  a  serious  danger  by  excluding 
the  germ-bearing  fly  and  mosquito.  When  it  was  dem- 


72  MERCHANDISING 

onstrated  beyond  question  that  the  mosquito  was  the 
sole  method  of  transmission  of  malaria  and  yellow 
fever,  then  it  was  at  once  apparent  to  the  intelligent 
orderer,  who  was  using  his  head,  that  the  use  of  screen 
wire  cloth  must  increase  and  multiply  in  the  South  of 
all  sections,  because  there  swamps  are  most  abundant, 
and  protection  from  malarial  diseases  most  needed.  It 
was  further  evident,  therefore,  that  it  was  an  article 
whose  use  must  grow  from  year  to  year,  as  the  ideas  of 
sanitation  and  hygiene  became  more  widespread,  and 
he  must  place  his  orders  on  this  basis. 

The  correct  ordering  of  steel  traps,  another  line  of 
seasonable  goods,  involves  not  only  a  study  of  the 
weather,  and  of  natural  history,  but  most  intricate  and 
difficult  of  all,  of  the  tastes  and  fancies  of  womankind  in 
the  matter  of  fashions.  The  uninformed  and  unthinking 
orderer  will  naturally  conclude  that  as  steel  traps  are 
principally  used  for  catching  fur-bearing  wild  animals, 
that  they  will  gradually  decrease  in  use  and  sales,  because 
everything  he  hears  and  reads  is  to  the  effect  of  the  rapid 
extermination  of  all  wild  animals.  This  belief  is  one  of 
many  prevalent  and  most  misleading  impressions,  be- 
cause it  is  a  half  truth,  the  worst  form  of  all  false  state- 
ments. The  orderer  who  investigates  finds  that  the 
larger  fur-bearing  animals  are  in  truth  becoming  rarer 


ORDERING— SEASONABLE  GOODS  73 

each  year,  but  that  this  is  not  true  of  the  smaller  quad- 
rupeds, such  as  musk  rats,  coons  and  skunks,  which  are 
still  very  plentiful.  He  also  finds,  contrary  to  all  pre- 
conceived opinions,  that  the  annual  catch  of  these 
smaller  animals  is  especially  heavy  in  some  of  the  most 
thickly  settled  states  of  the  Middle  West.  He  therefore 
orders  steel  traps  liberally  under  favorable  conditions, 
with  the  full  conviction  that  the  extinction  of  small  fur- 
bearing  animals  is  not  forbiddingly  imminent.  He  like- 
wise consults  the  weather  records  of  the  winter  just 
passed,  as  he  places  his  orders  in  the  Spring  for  the  coming 
winter's  sales.  This  is  for  the  purpose  of  noting  whether 
such  a  winter  had  much  snows  and  many  floods,  for  in 
such  an  event,  he  knows  that  many  traps  were  lost,  or 
washed  away,  and  consequently  need  to  be  replaced  the 
coming  winter.  The  crucial  matter,  however,  is  the  price 
of  furs.  He  learns  that  professional  trappers  are  not  so 
numerous  as  amateurs,  especially  farmer  boys,  with 
whom  trapping  is  more  or  less  of  a  side  issue,  and  who 
do  not  trap  to  any  extent  unless  there  is  the  incentive 
of  profit  in  the  shape  of  the  high  price  of  furs.  This 
price  in  turn  depends  upon  a  demand,  whose  sustaining 
force  is  found  in  the  fancy  of  women  for  adornment. 
The  connection  is  so  obvious  that  it  was  well  illustrated 
in  the  case  of  the  head  of  an  ordering  department  to  whom 


74  MERCHANDISING 

"  two  and  two  made  four,  not  sometimes,  but  all  the 
time,"  as  the  Thinking  Machine  said,  and  who  conse- 
quently went  through  life  noting  and  applying  everything 
he  saw  to  the  business  he  was  engaged  in.  Early  one 
Spring  he  noted  especially  that  two  out  of  three  women 
he  met  on  the  street  wore  fur  adornments  of  some  des- 
cription, and  that  many  riders  in  automobiles  had  fur 
coats.  He  figured  out  that  automobiles  were  constantly 
increasing  in  use,  and  that  fur-coated  riders  would  con- 
sequently be  more  numerous.  So  he  called  up  a  large  fur 
merchant,  and  asked  what  was  the  outlook  for  the  fashion 
in  furs  among  women  during  the  coming  winter.  He  was 
told  that  furs  would  probably  be  worn  more  than  ever. 
It  was,  therefore,  an  easy  deduction  that  with  a  heavy  de- 
mand, there  would  ensue  high  prices,  the  best  incentive 
to  trapping,  and  consequently  that  many  traps  would 
be  used.  So  he  placed  larger  orders  for  traps  than  ever 
before  and  had  the  goods,  when  his  less  far-sighted  com- 
petitors were  entirely  out  of  them. 

In  a  similar,  yet  contrary  way,  he  felt  the  effect  of 
the  great  use  of  automobiles  upon  another  line  of  season- 
able goods. 

He  realized  the  sale  of  hammocks  to  be  steadily  de- 
creasing, and  was  unable  to  account  for  it.  The  two  pre- 
ceding summers  had  been  warm  and  dry,  and  the  price 


ORDERING— SEASONABLE  GOODS  75 

of  hammocks  had  not  advanced.  Walking  in  the  park 
one  summer  night  the  compelling  cause  in  the  great 
procession  of  automobiles  flashed  suddenly  upon  him  as 
an  example  of  how  a  new  industry  often  affects  an  old 
one  in  a  most  unexpected  manner.  So  from  that  day  on 
he  began  to  reduce  the  size  of  his  orders  for  hammocks, 
for  riding  in  automobiles  was  fast  displacing  swinging 
in  hammocks.  These  illustrations  are  used  as  analogies, 
since  the  same  general  principles  apply  to  merchandising 
in  all  lines  of  business. 


CHAPTER  VIII 

HOLIDAY  GOODS 

Holiday  or  Christinas  goods  are  essentially  one  form 
of  seasonable  goods,  only  that  the  matter  of  the  season 
or  weather  in  determining  the  demand  and  sale  of  these 
goods  is  not  so  much  the  dominant  factor  as  is  the  Christ- 
mas or  holiday  tradition  and  spirit,  so  that  the  psycholog- 
ical phase  is  one  of  peculiar  importance. 

Some  of  the  goods,  such  as  skates  and  sleds,  are 
used  in  cold  weather.  But  others,  such  as  books, 
jewelry,  toys,  high-priced  cutlery,  carving  knives 
and  forks,  are  used  and  sold  all  the  year  round, 
though  by  custom  and  tradition  some  of  them,  as  for 
instance,  carving  knives  and  forks,  practically  have  come 
to  be  sold  almost  entirely  during  the  Christmas  or  hol- 
iday season.  From  the  nature  of  the  situation,  there 
can  be  no  hard  and  fast  definition  of  what  constitutes 
holiday  goods.  Especially  is  this  true,  because  many  of 
them,  Christmas  cards  as  an  example,  ebb  and  flow  in 
popular  favor,  and  are  the  subjects  of  changes  in  pop- 
ular taste  to  an  extent  that  makes  intelligent  ordering 

of  them  a  very  "difficult,  and  delicate,  not  to  say,  danger- 

76 


HOLIDAY  GOODS  77 

ous  operation/'  as  Koko  in  the  Mikado  remarked  of  self- 
decapitation. 

As  a  rule  they  are  luxuries  rather  than  necessities,  and 
in  this  respect  differ  essentially  from  the  regular  lines  of 
seasonable  goods.  As  a  matter  of  fact  almost  anything 
that  can  be  given  as  a  present,  and  can  be  used  in  cold 
weather,  may  be  classed  under  the  head  of  holiday  goods. 

So  far  as  the  sales  of  the  manufacturers  to  the  whole- 
saler or  jobber,  and  of  the  jobber  to  the  retailer  are  con- 
cerned, the  large  volume  of  such  sales  is  made  early  in 
the  season,  in  some  cases  as  far  back  as  the  preceding 
spring.  These  are  known  as  "  futures,"  and  in  the  case 
both  of  the  manufacturer  and  the  jobber  involve  a  com- 
plete and  accurate  record  of  the  amount  of  such  sales, 
that  they  may  be  ready  for  shipment  on  the  dates  spec- 
ified. The  manufacturers  of  ice  skates,  for  example, 
make  contracts  with  jobbers  along  in  February  for  ship- 
ment in  July  and  August  of  such  skates  as  the  jobbers 
may  specify.  The  jobber  in  turn  takes  orders  from  his 
retail  customers  for  shipments  in  August  and  later  on. 
He  depends  upon  the  manufacturers  shipping  promptly 
on  dates  specified,  that  he,  the  jobber,  may  in  turn  be 
able  to  ship  to  his  own  customers,  the  retailers.  Un- 
less this  matter  is  handled  intelligently,  especially  un- 
less the  jobber  ships  promptly  to  his  customers,  much 


78  MERCHANDISING 

dissatisfaction  is  apt  to  be  created.  The  jobber, 
through  his  salesmen,  solicits  future  business  on  ice 
skates  from  his  customers  on  the  basis  that  if  such  orders 
be  placed  early  with  him,  say  in  April  and  May,  for  ship- 
ment in  August  and  later,  he  will  thereby  be  enabled  to 
provide  himself  in  advance,  because  he  will  then  know 
through  the  medium  of  these  orders  the  extent  to  which 
he  will  be  required  to  provide  goods  sufficient  to  take 
care  of  such  orders.  He  advises  his  customers,  the  re- 
tailers, when  it  is  the  part  of  wisdom  for  them  to  place 
their  orders  for  ice  skates  that  they  may  thus  follow  the 
example  of  the  April  strawberry  and  be  early  so  as  to 
avoid  the  jam.  He  thus  tacitly  commits  himself  to  take 
care  of  such  orders  in  the  rotation  of  their  receiption.  For 
instance,  he  may  take  100  orders  for  shipment  of  ice 
skates  on  August  ist.  These  orders,  however,  may  have 
been  taken  all  the  way  from  May  to  June.  It  is  there- 
fore incumbent  upon  the  jobber  to  keep  such  accurate 
record  of  the  orders,  that  when  the  time  comes  for  ship- 
ment, the  orders  taken  earliest  shall  be  rilled  first.  This 
is  not  so  necessary  save  when  there  is  difficulty  in  getting 
sufficient  goods  at  the  time  required  for  shipment.  As 
an  example,  suppose  the  jobber  sells  10,000  pairs  of  ice 
skates  to  his  customers  for  shipment  August  ist,  but  on 
that  date  finds  that  he  has  received  only  9000  pairs 


HOLIDAY  GOODS  79 

from  the  manufacturer.  Unless  he  has  accurate  records  of 
the  dates  of  the  different  orders  given  by  his  customers,  he 
is  likely  to  fill  first  some  of  the  later  instead  of  the  earlier 
orders,  and  thus  those  of  his  customers  who  placed  their 
orders  the  earliest  fail  to  receive  that  benefit  of  their  fore- 
thought, which  he  tacitly  promised  should  be  their  portion. 
The  extreme  shortness  of  the  actual  holiday  or  Christ- 
mas season  renders  the  merchandising  of  holiday  goods 
a  matter  of  great  difficulty.  It  is  true  that  a  large  per- 
centage of  the  goods  are  sold  earlier  in  the  season  on 
"futures"  for  later  shipment.  But  there  is  always  a 
considerable  volume  of  business,  or  "fill  in"  orders  as 
they  are  termed,  which  must  be  reckoned  with  when  the 
season  is  really  on.  In  many  lines  this  season  is  scarcely 
more  than  three  weeks  in  extent,  and  the  problem  then 
becomes  one  of  supplying  this  brief  but  insistent  de- 
mand, and  yet  not  carrying  over  too  many  goods  be- 
yond the  season,  which  practically  ends  abruptly  on 
Christmas  day.  It  is  very  difficult  to  get  orders  rilled 
promptly  by  the  manufacturers  during  this  short  period, 
as  they  are  usually  crowded  beyond  their  capacity.  The 
danger  lies  in  allowing  the  manufacturers  to  retain  the 
orders  so  long  that  they  are  not  shipped  until  the  season 
is  over,  and  are  therefore  useless  for  the  original  purpose 
intended.  There  has  always  been  a  division  of  opinion 


8o  MERCHANDISING 

among  merchants  as  to  the  best  and  most  profitable 
plan  of  handling  seasonable  goods  towards  the  end  of  the 
season.  On  the  one  hand  it  is  held  that  it  pays  to  carry 
a  fairly  good  stock  to  the  end  of  the  season  even  at 
the  risk  of  carrying  over  some  goods,  since  the  main 
issue  is  not  to  lose  sales  and  the  profits  which  thus  accrue, 
as  well  as  not  to  disappoint  customers  who  depend  upon 
you  to  supply  their  wants  in  such  emergencies.  The 
contrary  practice,  is  to  run  the  stock  down  to  the  vanish- 
ing point  at  the  end  of  the  season,  even  at  the  risk  of 
failing  to  fill  some  orders.  The  argument  for  this  latter 
procedure  is  that  customers  as  a  rule  are  conscious  of  the 
situation,  and  do  not  expect  too  much  at  the  tail  end  of 
the  season  in  the  way  of  getting  their  orders  filled  com- 
pletely. It  is  argued  further  that  the  carrying  charges 
on  the  goods  carried  over  more  than  offsets  the  profit 
made  on  the  comparatively  few  sales  made  when  a  fairly 
good  stock  is  kept  up  till  the  end  of  the  season.  Goods 
thus  carried  over  are  often  completely  dead  stock  for 
from  eight  to  ten  months,  and  are  not  only  subject  to 
interest,  rent  insurance  and  taxation  charges,  but  likewise 
to  the  chance  of  depreciation  and  the  risk  of  decline  in 
price.  It  is  not  good  merchandising  to  carry  over  beyond 
the  season  more  than  5%  in  value  of  the  total  value 
of  the  seasonable  goods,  sold  during  the  entire  season. 


HOLIDAY  GOODS  81 

It  is  peculiarly  expensive  and  risky  to  carry  over  holiday 
goods,  because  of  the  uncertainty  of  the  demand  for 
them  from  one  season  to  another.  This  is  especially 
true  of  such  articles  as  Christmas  cards,  toys,  gift  books, 
and  similar  articles.  Some  of  them  have  the  brief  span 
of  one  or  two  seasons  as  their  portion  in  life,  and  are  dead 
thereafter  for  all  time  to  come;  To  carry  these  goods  over 
at  the  end  of  their  existence  is  to  lose  practically  their 
entire  value. 

The  part  which  the  weather  plays  in  the  sale  and  de- 
mand of  holiday  goods  is  often  most  effective  in  advance. 
A  cold  spell  late  in  November  or  early  in  December  will 
occasion  an  immediate  and  large  demand  for  ice  skates, 
sleds,  boys'  wagons,  and  the  like.  If  this  happens  again 
just  before  Christmas,  the  same  effect  will  be  observed, 
only  accentuated.  On  the  other  hand,  if  warm  weather 
continues  through  the  fall,  and  up  to  Christmas  day, 
there  will  be  a  noticeable  lack  of  demand  for  all  Christ- 
mas articles  affected  by  the  weather.  It  makes  no  dif- 
ference if  the  weather  grows  very  cold  the  day  after 
Christmas,  for  the  demand  is  over  and  past.  The  most 
potent  factor  in  the  demand  for  holiday  goods  is  the  com- 
parative purchasing  power  of  the  many,  according  as  to 
whether  the  times  be  prosperous  or  otherwise.  So  the 
amount  of  probable  demand  must  be  made  the  subject 


82  MERCHANDISING 

of  intelligent  study  and  analysis  many  months  in  ad- 
vance. The  nature  and  amount  of  harvest  yields, 
whether  manufacturing  and  other  industries  are  em- 
ployed, and  such  like  elemental  facts  are  the  principal 
components  in  the  equation. 

As  an  example,  in  1914  it  was  easy  to  forecast  as  early 
as  August  1 5th  of  that  year  after  the  European  War 
began,  that  the  trade  in  holiday  goods  would  be  com- 
paratively poor,  while  a  year  later  when  the  recovery 
from  the  effects  of  the  war  was  well  under  way,  an  exactly 
contrary  prophecy  was  sure  of  fulfillrnent. 

Holiday  goods  are  much  differentiated  from  other 
kinds  of  seasonable  goods  by  their  very  high  birth  rate, 
and  equally  high  death  rate,  since  there  are  constant  new 
accessions  to  their  ranks,  and  a  correspondingly  large 
mortality.  They  offer  a  great  field  for  the  exploitation  of 
goods  which  depend  largely  upon  appearance  rather 
than  their  merit  for  their  appeal  to  the  purchaser.  So 
inevitably  they  represent  the  constant  passing  away  and 
brief  tenure  of  life  of  such  articles,  which  in  turn  are  suc- 
ceeded by  others  equally  ephemeral  and  transitory. 
They  are  likewise  a  source  of  sale  of  many  high-priced 
luxuries  of  questionable  value  and  small  usefulness,  which 
would  find  no  market  save  for  the  optimistic  psychology 
of  the  season. 


CHAPTER  DC 

SELLING 

What  is  known  in  trade  as  the  "Selling  end  of  the 
business"  is  after  all  the  most  difficult,  and  one  whose 
real  importance  has  been  perceived  only  of  late  years. 
Salesmenship  is  both  an  art  and  a  science,  one  whose  real 
import  we  are  but  dimly  discerning.  The  salesman  is 
the  last  word  of  an  organization  to  its  customers,  and 
success  in  selling  goods  is  the  final  end  to  which  most  all 
the  energies  and  the  various  factors  of  the  business  finally 
tend.  So  salesmenship  is  a  subject  far  too  comprehensive 
to  be  discussed  in  a  single  chapter,  and  consequently 
must  be  the  subject  of  a  separate  volume.  Therefore, 
in  this  chapter  only  such  phases  are  treated  as  bear  more 
directly  upon  the  subject  of  merchandising. 

The  first  thought  in  buying  and  ordering  goods  is  as 
to  how  they  will  sell,  for  obviously  the  whole  purpose  and 
intent  of  the  merchant  in  buying  and  ordering  is  to  pro- 
vide such  articles  as  find  ready  or  certain  sale.  It  makes 
much  difference,  for  instance,  whether  salesmen  carry 
samples  of  certain  articles  or  lines  as  to  how  they  sell. 
It  is  practically  impossible  to  sell  to  any  extent  most  of 

83 


84  MERCHANDISING 

the  items  which  comprise  the  line  of  cutlery  unless  the 
salesmen  carry  samples.  Every  purchaser  of  a  pocket 
knife  or  a  carving  knife,  if  he  be  a  good  buyer,  wishes  to 
examine  and  inspect  the  article  before  he  buys  it.  You 
cannot  describe  it  to  him,  nor  even  photograph  it  so  that 
he  can  visualize  it  so  well  as  when  he  sees  the  thing  it- 
self. It  is,  therefore,  essential  that  the  orderer  know 
whether  the  salesmen  of  his  organization  are  carrying 
samples  of  certain  lines  of  goods.  It  is  usually  entirely 
unnecessary  for  the  salesmen  to  carry  samples  of  such 
staple  lines  of  goods  as  carriage  bolts,  strap  and  T  hinges, 
tin  wash  basins,  and  the  like.  But  salesmen  can  largely 
increase  their  sales  of  padlocks  by  carrying  samples  of 
them. 

There  is  no  sharp  dividing  line  to  determine  where 
carrying  samples  ceases  to  help  the  sale  of  the  goods. 
There  may  be  in  stock  a  line  of  goods,  which  the  con- 
cern has  carried  for  a  long  time  and  has  illustrated  in 
their  trade  catalogue,  and  with  which  the  trade  pre- 
sumably are  familiar,  such,  for  instance,  as  a  line  of 
mortise  door  locks  in  some  design  of  bronze  goods. 
Yet  the  salesman  who  carries  samples  of  these  goods  and 
shows  them  industriously  will  probably  thereby  swell 
his  sales  of  these  articles. 

It  is  almost  essential  that  the  salesman  carry  samples 


SELLING  85 

of  all  new  goods,  sometimes  even  very  staple  goods,  so 
that  the  trade  may  thus  become  familiar  with  them. 

The  necessary  thing  in  carrying  samples  is  that  the 
salesman  show  them  to  his  customers.  Otherwise,  if 
the  salesman  be  lazy  or  indifferent  and  merely  carry  his 
samples  around  in  his  sample  trunk,  and  only  show  them 
occasionally  because  of  the  labor  and  trouble  involved, 
then  the  samples  become  an  unnecessary  expense  as 
excess  baggage  and  merely  hamper  the  movements  of 
the  salesman. 

A  most  important  factor  in  selling  goods  is  the  matter 
of  price.  If  a  concern  asks  more  for  its  goods  than  they 
can  be  bought  for  from  others,  then  the  sales  will  be 
in  smaller  proportion  accordingly.  If  on  the  contrary 
the  price  of  any  article  is  less  than  the  competitors  of 
a  concern  are  asking  for  it,  the  sales  will  be  unduly 
large.  It  is  the  business,  therefore,  of  the  buyer  and 
the  orderer  to  know  the  prices  his  house  asks  for  goods, 
and  to  govern  his  purchases  accordingly.  It  is  a  fact 
of  experience,  however,  that  low  prices  do  not  always 
sell  goods,  especially  if  they  be  of  high  quality  and  merit, 
but  often  have  the  contrary  effect.  If,  for  instance, 
a  certain  high  grade  hand  saw  has  always  been  sold  to 
the  carpenters  by  the  retailer  for  $2.00,  and  the  re- 
tailer reduces  his  price  to  $1.50,  the  chances  are  that 


86  MERCHANDISING 

he  will  sell  fewer  saws  than  before.  The  psychology  of 
this,  as  confirmed  by  long  experience,  is  that  the  reduc- 
tion in  price,  especially  if  made  without  any  apparent 
reason,  immediately  raises  in  the  mind  of  the  carpenters 
the  impression  that  there  has  been  a  reduction  in  the 
quality  of  the  saw,  corresponding  to  the  reduction  in 
price.  As  they  always  bought  the  saw  on  its  merit,  and 
because  it  was  an  effective  tool,  any  suspected  or  even 
imaginary  reduction  in  the  quality  of  the  saw  causes 
them  to  cease  purchasing  it  altogether  and  to  seek  some 
other  saw  which  fulfills  their  requirements  of  merit. 
As  a  matter  of  fact  in  the  case  of  tools,  especially  those 
by  which  men  make  their  living,  the  largest  sellers  by 
far  are  those  of  merit  and  of  higher  grade  rather  than 
those  which  are  cheaper  both  in  price  and  quality. 

There  is  another  curious  convention  which  obtains 
in  all  lines  of  goods.  Certain  prices  of  certain  articles 
to  consumers  become  well  known,  and  the  consumers 
and  users  are  apt  to  refuse  to  pay  more  than  these  well- 
known  prices.  For  instance,  the  price  of  one-quart  tin 
fruit  cans  was  usually  ten  cents  to  the  user  prior  to  the 
European  War.  If  the  dealer  asked  more  than  that, 
the  housewife  was  very  likely  to  refuse  altogether  to 
buy  it  and  to  endeavor  to  use  something,  say  a  glass  jar, 
in  its  place.  In  the  same  manner  a  certain  high-grade 


SELLING  87 

shovel  was  sold  by  a  wholesale  hardware  concern  to  the 
retailer  at  a  price  which  enabled  him  to  sell  it  in  turn  to 
the  consumer  for  $1.00  per  shovel.  The  wholesale  con- 
cern advanced  their  price  to  the  retailer,  because  the 
manufacturer  of  the  shovel  in  question  raised  his  price 
to  the  wholesaler.  The  retailer  followed  suit  and 
advanced  his  price  to  the  consumer  to  $1.25  per  shovel, 
and  in  consequence  the  sales  of  the  shovels  fell  off  ap- 
preciably. This  is  another  instance  of  the  necessity  of 
the  buyer  and  orderer  keeping  in  constant  touch  with  the 
prices  at  which  articles  are  sold,  that  he  may  regulate 
his  ordering  accordingly. 

Again,  there  are  styles  of  padlocks  which  are  sold 
to  the  consumer  at  certain  prices.  Unless  the  buyer 
for  the  jobber  can  buy  them  at  a  certain  figure,  which 
will  enable  him  to  sell  them  to  the  retailer  at  a  price 
which  permits  the  retailer  to  make  the  conventional 
price  to  the  consumer,  then  the  chances  are  that  the 
retailer  will  buy  them  only  in  very  small  quantities  or 
else  not  at  all.  If,  for  instance,  he  cannot  buy  for  $2.00 
per  dozen  a  style  of  padlock  which  he  usually  retails  to 
the  consumer  at  25  cents  a  piece,  he  will  probably,  in 
the  phrase  of  the  trade,  "pass  them  up."  So  the  buyer 
for  a  wholesale  house  when  buying  an  article,  especially 
a  new  article,  usually  reasons  backward  from  the  price 


88  MERCHANDISING 

the  consumer  will  pay,  to  that  which  the  retailer  can 
consequently  afford  to  pay  and  still  have  a  sufficient 
profit,  to  that  which  he,  the  wholesaler,  can  in  turn 
afford  to  pay  the  manufacturer.  A  concrete  case,  one 
of  actual  occurrence,  illustrates  this  point.  A  certain 
brass  padlock  was  sold  by  the  manufacturers  to  the 
jobbers  at  a  price  which  forced  the  retailer  to  sell  to 
the  consumer  at  20  cents  each.  The  sales  were  dis- 
tressingly small,  because  the  padlock  was  not  worth 
20  cents  to  the  average  consumer.  So  the  buyer  of 
a  large  jobbing  house  offered  the  manufacturer  of 
this  padlock  an  order  of  many  thousand  dozen  if  the 
manufacturer  would  make  the  jobber  a  price  which 
would  permit  the  padlock  to  be  sold  to  the  consumer 
for  10  cents  each.  The  manufacturer  accepted  the 
offer,  and  the  jobber  thenceforth  sold  thousands  of 
dozens  where  he  formerly  sold  hundreds.  Where  the 
styles  of  the  goods  change  from  season  to  season,  there 
is  practically  no  effective  way  of  selling  them  save  by 
samples.  Photographs  are  often  used,  and  in  some 
cases  small  models  where  the  articles  are  too  bulky  or  too 
heavy  to  be  carried.  Where  goods  are  expensive  or 
very  stylish  and  attractive,  there  is  no  way  of  so  im- 
pressing the  customer  with  their  value  as  by  samples. 
It  is  a  custom  in  both  retail  and  wholesale  houses  to 


SELLING  89 

have  "compaigns"  or  "  drives"  on  certain  lines  of  goods 
at  certain  times  and  for  a  specified  time.  It  is  the  duty 
of  the  orderer  of  these  goods  to  accumulate  a  sufficient 
stock  to  take  care  of  the  unusual  sales.  In  wholesale 
houses  this  campaign  often  takes  the  form  of  what  are 
known  as  "Mascot"  months.  A  certain  line  of  goods, 
say  padlocks,  are  selected  as  mascots  for  the  month  of 
August.  The  salesmen  are  instructed  to  "  push  the 
sale"  of  padlocks  during  August,  and  sometimes 
prizes  or  rewards  are  offered  as  incentives  to  the 
salesman  who  makes  the  best  showing.  The  part 
of  the  orderer  of  the  padlocks  is  not  only  by  due  diligence 
and  forethought,  to  provide  sufficient  padlocks  to  take 
care  of  all  the  orders  that  may  come  in  for  them,  but 
likewise  not  to  overdo  this  and  thus  have  an  overstock 
when  the  mascot  month  is  past.  It  is  an  interesting  fact 
of  experience,  however,  that  there  is  rarely  any  appreci- 
able reaction  in  sales  subsequent  to  the  mascot  campaign, 
and  that  the  month  following  the  mascot  generally  shows 
a  normal  sale  of  the  article  selected  as  a  mascot  for  the 
month  previous. 

There  is  sometimes  a  peculiar  feature  in  selling,  in 
which  the  human  equation  " plays  the  lead,"  and  which 
no  system  of  records  can  cover.  A  salesman  will  take 
a  fancy  to  some  article  and  sell  many  more  of  such 


90  MERCHANDISING 

article  than  is  his  proportion  of  those  used  in  his  territory. 
If  the  salesman  leaves  the  house,  or  is  transferred  to 
some  other  territory,  the  sale  of  that  particular  article 
falls  away  to  almost  nothing,  and  the  stock  on  hand 
may  prove  very  difficult  to  dispose  of.  It  is  always 
well  for  the  orderer  of  such  goods,  when  noting  their 
abnormal  sales,  to  inquire  into  the  cause,  and  to  have 
it  understood  with  the  salesman  in  question  that  he 
must  dispose  of  any  goods  which  are  ordered  because  of 
his  peculiar  bent. 

New  goods  are  frequently  ordered  by  a  business 
organization  because  a  salesman  finds  a  demand  for 
them  in  his  territory,  but  the  orderer  will  find  from 
experience  that  the  salesman  unconsciously  is  apt  to 
overestimate  the  amount  of  them  sold,  and  should  pro- 
ceed cautiously  until  his  records  of  sales  give  him  a 
substantial  basis  for  ordering. 

One  effect  of  rising  prices  on  the  sale  of  goods  is  the 
shifting  demand  from  one  article  to  another,  and  unless 
the  orderer  of  the  goods  be  perpetually  "on  his  job"  he 
is  apt  sometimes  to  be  caught  "asleep  at  the  switch  " 
with  an  overstock  of  high-priced  goods  on  his  hands. 
Recently  in  the  rise  of  prices  caused  by  the  European 
War  there  were  numerous  instances  of  this.  One  case  was 
typical.  Brass  shoe  nails  are  large  sellers  in  the  hard- 


SELLING  91 

ware  trade,  but  brass  plated  shoe  nails  are  still  larger  sel- 
lers, because  cheaper  in  price.  During  the  advance  in 
copper,  and  consequently  in  things  made  of  brass,  the  price 
of  brass  shoe  nails  became  so  high  that  the  sale  of  them 
practically  ceased,  and  the  demand  shifted  almost  en- 
tirely to  brass  plated. 

Following  is  a  very  common  instance  of  the  manner 
in  which  selling  affects  buying  and  ordering  in  merchan- 
dising. There  will  be  an  article,  on  which  the  patent  has 
expired,  but  which  has  become  well  and  favorably  known 
both  to  the  distributing  and  consuming  trade.  Another 
article,  not  so  well  known  but  similar  in  appearance  and 
apparently  answering  the  same  purpose,  appears  upon 
the  market.  The  larger  sale  still  goes  with  the  original 
or  "genuine"  article  as  it  is  apt  to  be  called,  though  the 
"  imitation"  is  sold  at  a  somewhat  less  price.  Appar- 
ently it  is  necessary  to  carry  in  stock  only  one  of  these 
articles,  and  that  the  best  seller,  since  the  goods  are  so 
closely  related.  Experience  often  shows,  however,  that 
the  contrary  practice  is  the  better  paying  one  in  many 
instances,  and  all  because  of  a  peculiar  psychological 
fact.  It  the  house  carries  only  one  article,  and  that  the 
original,  the  salesman  learns  that  his  customers  often 
call  for  the  cheaper  article,  and  finding  that  the  sales- 
man's house  cannot  supply  it,  demand  that  the  sales- 


92  MERCHANDISING 

man  make  them  the  same  price  on  the  original  article 
that  they  can  buy  the  imitation  for,  on  the  plea  that 
the  imitation  answers  their  purpose  equally  well.  The 
salesman  often  finds  that  he  has  Hobson's  choice  of 
not  getting  the  order,  or  else  of  reducing  his  price  on 
the  original  to  meet  the  price  of  the  imitation.  Whereas 
if  he  has  both  genuine  and  imitation  to  offer,  he  meets 
the  demand  for  a  cheaper  article  with  the  imitation, 
and  for  better  quality  with  the  genuine  at  his  regular 
price.  The  interesting  and  very  peculiar  feature  of 
this  is  that  when  the  customer  finds  that  the  salesman 
has  the  imitation  article,  he  rarely  buys  it,  but  takes 
the  genuine  at  the  regular  price.  So  to  have  both 
articles  in  stock  is  often  wise  policy,  since  the  carrying 
of  the  imitation  "sustains"  as  it  is  called,  the  price  of 
the  genuine  article. 


CHAPTER  X 

FILLING  ORDERS  AND  OTHER  RELATED  FACTORS 

Service  is  the  keynote  of  success  in  modern  merchan- 
dising.  By  service  is  meant  primarily  complete  filling 
and  prompt  shipment  of  orders  received  from  customers. 
Complete  filling  of  all  orders  in  actual  practice  is  found 
to  be  impossible,  because  it  is  not  possible  always  to  have 
on  hand  such  an  unbroken  stock  of  goods  as  will  take 
care  of  those  wants  in  the  shape  of  orders  from  customers. 
Obviously  no  system  of  records,  however  accurate  and 
intelligently  kept,  can  anticipate  such  wants.  Especially 
is  this  true  because  of  constant  variation  in  demand  due 
to  those  ceaseless  changes  in  the  taste  of  buyers,  and  in 
general  conditions,  both  material  and  psychological,  which 
alter  from  day  to  day.  Moreover,  manufacturers  usually 
are  unable  to  ship  goods  at  sight  to  supply  the  wants  of  the 
jobbing  and  retail  trade,  and  there  are  often  delays  in 
transit  which  cannot  be  avoided.  All  these  factors  cause 
shortages,  that  is,  there  are  items  on  some  orders  of  which 
the  stock  is  either  exhausted  or  else  not  in  sufficient  quan- 
tity to  fill  the  orders.  These  shortages  should  be  reported 

promptly  by  the  stock  department  to  the  ordering  depart- 

93 


94  MERCHANDISING 

ment,  as  outlined  in  the  chapter  on  "The  Care  of  Stock." 
It  then  becomes  the  part  of  the  ordering  department  to 
obtain  the  goods  as  quickly  as  possible.  If  the  needed 
goods  are  already  due  on  orders  from  some  manufacturer, 
then  either  by  letter,  telegraph  or  telephone  the  manufac- 
turer should  be  urged  to  make  prompt  shipment.  Often 
the  goods  are  of  such  nature  that  they  can  be  ordered 
by  express  without  undue  expense.  The  usual  method 
of  detennining  whether  or  not  it  is  profitable  to  do  so 
is  to  find  out  the  relation  between  the  express  charges, 
the  cost  of  the  goods  and  the  price  at  which  they  are 
sold.  If,  for  instance,  a  concern  is  short  an  article  which 
costs  $1.50  per  dozen,  is  sold  for  $2.50  per  dozen,  weighs 
25  pounds  to  the  dozen  and  the  express  charges  from 
place  where  made  to  the  concern  in  question  are  $2.00 
per  100  pounds,  then  it  is  seen  that  the  cost  of  the  article 
per  dozen  when  ordered  by  express  is  50  cents  per  dozen, 
which  added  to  the  $1.50  per  dozen  cost  makes  a  cost 
delivered  by  express  of  $2.00  per  dozen  against  a  selling 
price  of  $2.50  per  dozen,  leaving  a  gross  profit  of  50 
cents  per  dozen.  It  is,  therefore,  good  business  to  have 
the  goods  come  by  express  rather  than  await  the  slow  de- 
lay of  freight,  since  the  sooner  they  are  in  stock,  the  sooner 
they  can  be  used  to  fill  orders,  and  thus  give  good 
service.  The  best  rule  to  adopt  is  to  order  by  express 


FILLING  ORDERS  95 

in  case  of  shortages,  where  the  total  cost  of  so  doing  does 
not  exceed  the  price  at  which  the  goods  are  sold.  It  is 
better  to  sell  the  goods  at  cost  than  to  be  out  of  them 
and  thus  disappoint  customers.  It  is  not  necessary  to 
order  the  entire  lot  by  express,  but  only  such  proportion 
as  will  bridge  over  the  difficulty  until  a  freight  shipment 
may  arrive.  Obviously  some  goods  are  too  heavy  and 
the  express  charges  bear  too  great  a  relation  to  the  cost 
of  the  goods  to  permit  coming  by  express  without  a 
serious  loss.  It  would  be  foolish,  for  instance,  to  order 
wire  nails  by  express. 

When  the  shortage  is  reported,  if  goods  are  very 
staple  and  are  called  for  constantly,  it  often  pays  to 
telegraph  the  order  for  them  to  the  factory,  so  as  to 
save  the  delay  which  would  be  occasioned  by  sending 
the  order  by  mail  in  the  usual  way.  An  order  placed 
for  goods  that  are  short  should  always  contain  a  request 
to  the  manufacturer  to  advise  the  sender  of  the  order 
on  receipt  of  said  order  when  shipment  will  be  made, 
so  that  there  may  be  some  knowledge  of  when  the  goods 
will  be  received.  In  some  cases,  where  such  goods  are 
shipped  in  car  loads,  it  is  well  to  have  the  factory  tele- 
graph routing  and  number  of  the  car,  so  that  the  railway 
transporting  it  may  be  instructed  to  watch  it  and  bring 
it  through  as  quickly  as  possible.  Where  goods  can  be 


96  MERCHANDISING 

ordered  in  full  car  loads,  with  due  regard  to  turnover 
of  stock  and  the  amount  of  money  invested,  it  should  be 
done,  as  car  loads  always  come  through  more  promptly 
than  less  than  car  loads,  with  the  goods  usually  in  better 
condition.  Small  orders  of  light  weight  goods  can  often 
profitably  be  ordered  by  parcel  post. 

A  memorandum  should  also  be  kept  in  a  diary  to 
look  frequently  into  the  question  as  to  whether  the 
manufacturers  have  shipped  the  goods  needed  so  badly, 
since  manufacturers,  being  human  and  fallible,  are  not 
always  able  to  ship  promptly  on  the  dates  they  agreed 
to.  Where  shipments  have  not  been  made,  then  man- 
ufacturers should  again  be  urged  to  make  them. 

Sometimes  there  may  be  found  in  stock  similar  goods, 
which  may  be  substituted  temporarily  on  orders  for  the 
goods  which  are  short  until  the  required  goods  come  in. 
If,  for  instance,  a  certain  pocket  knife  is  short  there  may 
be  another  one  in  stock,  similar  in  looks,  design  and 
appearance,  which  can  safely  be  substituted  for  the  one 
short.  Always,  however,  the  article  substituted  must 
be  at  least  equalin  quality  and  appearance  to  the  one 
for  which  it  is  substituted,  and  never  inferior.  Sub- 
stitution is  a  risky  performance,  though  constantly 
done,  since  there  is  always  the  chance  of  offending 
the  customer  by  sending  something  different  from 


FILLING  ORDERS  97 

what  he  ordered.  In  the  case  of  the  pocket  knife 
mentioned,  as  an  example,  the  customer  may  have  all 
he  wants  in  his  own  stock  of  the  substituted  article  sent 
him,  which  thus  may  prove  a  source  of  irritation.  The 
"  substituter,"  the  one  who  does  the  substituting,  should 
be  a  man  of  experience  and  judgment,  and  thoroughly 
familiar  likewise  with  the  goods  in  general,  so  as  to  know 
when  and  what  to  substitute.  Also  he  should  know 
something  of  the  nature  and  peculiarities  of  the  cus- 
tomers, so  as  to  determine  those  on  whose  orders  it  is 
safe  for  him  to  substitute,  and  those  who  "will  not  stand 
for  it."  Substituting  has  a  double  purpose,  the  first, 
not  to  lose  the  sale  altogether,  and  the  second,  to  give 
the  customer  something  which  may  answer  his  purpose 
rather  than  not  ship  him  anything  at  all.  Whatever 
may  be  the  various  theories  on  this  subject,  the  facts  of 
experience  seem  to  indicate  that  most  substitutions 
"get  by"  and  apparently  are  satisfactory. 

"Buy  outs"  are  another  form  of  getting  goods  quickly 
to  fill  shortages  on  orders.  They  consist  in  buying  out 
such  goods  as  may  be  had  in  the  city  or  town  in  which 
the  wholesaler  is  situated,  to  such  an  extent  as  will  suffice 
temporarily  to  take  care  of  the  shortages.  In  large 
cities,  where  there  are  several  wholesalers  in  the  same  line 
of  business,  this  is  a  frequent  practice,  and  it  usually  re- 


98  MERCHANDISING 

suits  from  the  law  of  chance  that  all  the  wholesalers  are 
not  likely  to  be  out  of  the  same  goods  at  the  same  time. 
It  is  rather  an  expensive  method,  since  usually  compet- 
itors charge  each  other  very  nearly  the  same  prices  that 
they  charge  their  own  customers.  Consequently  such 
buying  is  usually  done  in  very  small  quantities,  and  only 
to  satisfy  immediate  and  pressing  needs  in  the  way  of 
shortages. 

Another  system  is  what  is  known  as  "back  orders." 
This  consists  in  making  a  transcript  or  "back  order" 
of  the  items  which  are  short,  shipping  the  remainder 
which  it  is  possible  to  fill  complete,  and  advising  the 
customer  that  the  goods  short  have  been  back  ordered 
and  will  be  shipped  to  him  as  soon  as  they  arrive  from 
the  manufacturer.  The  back  order  is  then  held,  and 
filled  and  shipped  from  the  first  goods  which  come  in, 
being  given  preference  in  this  respect  over  all  other  orders. 
Back  ordering  goods  is  done  under  several  conditions — 
when  the  goods  are  in  transit  or  "on  the  road,"  as  is  the 
trade  term,  and  will  be  in  shortly,  so  that  the  customer 
will  get  thus  them  as  quickly  as  if  he  ordered  them  anew 
from  some  other  concern;  or  when  the  goods,  which  are 
back  ordered,  are  very  scarce,  and  the  customer  is  likely 
to  get  them  as  quickly  by  having  them  back  ordered  as 
if  he  ordered  them  from  some  other  concern,  who  would 


FILLING  ORDERS  99 

also  probably  be  out  of  them;  or  when  the  goods  back 
ordered  are  in  some  manner  peculiar  to  the  house  from 
whom  they  are  ordered  and  cannot  be  obtained  from 
any  other  concern.  The  policy  of  back  ordering  is  to 
prevent  the  loss  of  sales,  as  is  the  case  when  the  goods 
short  are  omitted  entirely.  But  the  interest  of  the  cus- 
tomer must  always  be  borne  in  mind,  and  it  is  not  only 
manifestly  unfair  to  the  customer,  but  likewise  poor 
business,  to  back  order  shortages  when  it  means  that 
there  will  be  a  long  delay  in  shipping  those  goods,  which 
meanwhile  the  customer  might  get  more  quickly  from 
other  sources  of  supply. 

Promptness  in  filling  orders  depends  first  upon  having 
a  well-assorted  and  sufficiently  large  amount  of  goods  on 
hand  to  take  care  of  the  orders;  secondly,  upon  a  working 
system,  efficiently  administered,  which  makes  the 
"getting  out"  and  shipping  of  the  goods  so  ordered  a 
matter  of  comparatively  short  time.  In  a  concern  which 
carries  large  stocks  and  large  assortments,  much  in- 
telligently administered  system  is  necessary  to  prevent 
all  the  innumerable  details  from  hampering  and  delaying 
shipments.  The  variety  of  assortments  when  carried 
too  far  is  often  a  handicap  in  filling  orders,  because  it 
introduces  undue  details,  and  makes  it  more  difficult 
to  keep  up  the  stock.  Obviously  it  is  easier  to  keep  up 


ioo  MERCHANDISING 

a  stock  of  two  items  than  of  one  hundred.  Yet  the  gen- 
eral policy  of  American  merchandising  still  tends  to  the 
one  hundred  item  policy  rather  than  to  the  two.  Every 
whim  and  fancy,  as  well  as  every  real  need,  is  consulted 
in  the  matter  of  assortments,  until  the  variety  of  assort- 
ments has  been  raised  to  the  Nth  degree.  At  this  writing 
there  seems  to  be  a  healthy  reaction  among  manufac- 
turers, jobbers  and  retailers  towards  smaller  assortments, 
which  yet  answer  every  reasonable  purpose. 


CHAPTER  XI 

FINANCIAL  FACTORS, — CREDIT,  COLLECTIONS,  ACCOUNTING 

It  is  a  common,  yet  true,  saying  in  the  business  world 
that  money  is  the  life  blood  of  trade.  All  the  processes 
of  merchandising  are  directed  to  making  or  conserving 
money,  since  this  is  the  ultimate  measure  of  success. 
No  business  can  be  said  to  prosper  which  does  not  show 
a  profit.  How  the  money  is  made,  and  what  is  done 
with  it,  is  another  matter,  that  of  ethics.  Incidentally, 
no  business  even  with  the  highest  code  of  ethics  can 
ever  keep  in  successful  operation  for  any  length  of  time 
unless  the  business  itself  be  a  success  financially.  The 
financing  of  a  business  is  a  mixed  matter  of  Financiering 
and  Merchandising,  and  so  will  be  treated  in  this  chap- 
ter only  as  it  relates  to  Merchandising. 

In  ordering  goods  one  seeks  to  have  on  hand  only  that 
stock  which  is  needed,  else  there  results  a  locking  up  of 
idle  capital  and  the  expense  of  carrying  charges,  so  that  it 
may  become  necessary  to  sell  these  overstocks  at  a  small 
profit  or  even  at  a  loss  and  thus  to  "turn  them  into 
money."  The  turnover  of  stock  has  for  its  purpose  the 
employment  of  as  small  an  amount  of  capital  as  is  consist- 

101 


102  MERCHANDISING 

ent  with  the  due  filling  of  orders.  The  intent  of  buying  is 
to  procure  low-priced  goods  that  selling  may  thus  make  a 
satisfactory  profit  on  them.  The  aim  of  credit  is  to 
offer  no  obstacle  to  the  wide  prosecution  of  business, 
save  such  caution  as  will  prevent  undue  loss  of  money. 

The  extending  of  credit  to  customers  is  largely  a  mat- 
ter of  judgment,  which  has  for  its  basis  a  knowledge  of 
the  customer's  financial  condition,  of  the  general  business 
conditions  in  the  customer's  territory,  and  finally,  and 
most  of  all,  the  standing  and  personal  character  of  the 
customer  himself.  For  in  the  last  analysis,  credit, 
whether  extended  by  a  bank  or  a  mercantile  concern, 
finally  rests  upon  the  character  of  the  recipient.  In  most 
large  wholesale  concerns,  the  principal  difficulty  about 
extending  credit  is  that  the  credit  man  usually  has  little 
or  no  knowledge  either  of  the  customers  or  of  their  ter- 
ritory. His  information  is  generally  derived  from  the 
traveling  salesmen  of  his  house,  the  reports  of  mercantile 
agents,  and  such  stray  gleanings  as  he  gathers  from  all 
other  sources.  If  the  credit  man  could  and  would  travel 
more  among  his  customers  he  would  secure  a  much  clearer 
and  more  intelligent  view  of  his  customers  and  of  their 
credit  risks. 

Much  the  same  thing  is  true  of  the  matter  of  collec- 
tions, though  in  most  houses  credits  and  collections  are 


• 


FINANCIAL  FACTORS— CREDIT,  ETC.  103 

associated  in  one  department.  The  collection  man 
in  a  large  house,  is  usually  remote  from  the  scene  of 
action,  and  has  only  the  point  of  view  that  the  money 
is  due  and  should  be  paid.  It  is  the  true  point  of  view, 
and  logically  an  unanswerable  argument.  It  is  also 
equally  true  that  often  the  collection  man,  like  Pharaoh 
of  old,  must  constantly  harden  his  heart,  and  also  like 
Shylock,  exact  his  pound  of  flesh,  lest  he  be  found  an 
"easy  mark"  and  have  bad  debts  "put  over  on  him." 
But  there  are  times  and  circumstances  where  leniency  and 
forbearance  and  consideration  pay  well  in  the  long  run. 
In  such  cases  the  best  guides  to  good  judgment  are,  if 
possible,  a  knowledge  of  the  customer,  and  the  con- 
ditions and  surroundings  under  which  he  does  business. 
For  instance,  in  the  Great  Plains  States  of  the  West 
and  the  Southwest  the  climate  is  the  keynote  of  the 
business  situation,  for  agriculture  and  grazing  are  the 
principal  industries  and  revenue  producers  for  the  com- 
mercial world.  Nature  is  by  turns  both  cruel  and  kindly. 
There  are  wet  seasons  when  the  clouds  drop  fatness, 
and  dry  years  when,  as  related  by  Elijah, "The  sky  is 
as  brass  and  the  earth  as  iron  underneath,"  and  when 
hot  winds  destroy  all  crops  and  all  vegetation,  as  with 
the  breath  of  a  furnace.  During  the  wet  season  busi- 
ness is  good,  for  crops  are  plentiful  and  livestock  fat 


104  MERCHANDISING 

and  abundant  on  the  great  grazing  ranges;  also  credit 
is  easy  to  obtain  and  collections  good.  In  the  years  of 
heat  and  drought,  business  is  a  forlorn  affair  and  lives 
largely  upon  its  own  fat,  save  in  those  progressive  sec- 
tions where  the  growing  of  drought-resisting  plants  and 
forage  crops  has  changed  the  face  of  nature.  In  such 
troublous  times  the  retail  dealers  have  nothing  to  pay 
with,  for  the  farmers,  their  best  customers,  have  but  little 
to  sell,  and  sometimes  must  be  supplied  with  the  bare 
necessities  of  life  until  another  and  better  crop  comes 
around.  In  such  cases  it  does  little  good  to  crowd 
the  retail  dealer  hard  for  collections,  as  it  may 
only  result  in  his  bankruptcy,  from  which  few  creditors 
reap  anything  but  a  heavy  loss.  If  the  customer  be 
honest,  square,  industrious  and  economical,  it  is  often 
wiser  to  carry  him  along  through  his  troubles,  allowing 
him  to  pay  up  from  time  to  time  as  best  he  can,  and 
even  to  extend  him  moderate  credit  on  such  com- 
paratively few  goods  as  he  may  need.  It  is  the  custom 
of  the  country,  and  those  who  follow  it  with  judgment 
and  discretion  and  due  knowledge  of  the  situation, 
usually  have  then*  reward  in  time,  in  the  shape  of  back 
debts  paid  up,  and  a  continuing  business  from  the  cus- 
tomer who  thus  has  been  tided  over  his  troubles. 
While  consideration  of  this  nature  may  often  be  the 


FINANCIAL  FACTORS— CREDIT,  ETC.  105 

best  method  of  making  collections,  it  must  be  always 
borne  in  mind  that  the  chief  factor  in  successful  collect- 
ing is  tireless  industry  in  watching  accounts,  and  in 
pressing  demand  for  payment  for  those  which  are  due  or 
past  due.  It  is  much  the  case  of  the  Unjust  Judge  and 
the  clamorous  Widow  as  recited  in  the  New  Testament. 
Those  who  are  most  persistent  and  untiring  in  asking 
for  payment  are  apt  to  receive  it  in  preference  to  those 
who  fail  to  make  their  wants  known.  There  is  no  spe- 
cific rule  nor  form  for  handling  customers  so  as  to  get  best 
results.  Each  one  must  be  the  subject  of  a  separate 
study,  according  to  the  conditions  which  surround  him 
and  his  own  peculiarities.  It  is  well  and  often  nec- 
essary for  the  credit  man  to  consult  the  salesmen  who 
visit  customers  as  to  the  nature  of  the  customers,  and 
the  state  of  their  environment,  though  it  must  always 
be  borne  in  mind  that  the  natural  tendency  of  the  sales- 
man is  to  be  lenient  with  his  customers,  lest  he  lose  their 
trade.  So  this  factor  must  be  discounted  in  such  sug- 
gestions as  the  salesman  gives  as  to  how  to  handle  the 
customers.  A  very  large  proportion  of  the  retail  trade 
are  unfortunately  poor  collectors,  because  they  are 
afraid  of  offending  their  customers  and  losing  their 
trade.  It  is  a  fatal  mistake,  for  there  is  an  aphorism 
in  trade  that  no  merchant  ever  failed  because  of  being 


io6  MERCHANDISING 

a  good  collector,  but  a  very  large  number  have  gone 
to  the  wall  because  of  the  opposite  characteristic.  The 
smaller  the  town,  the  more  apt  the  dealer  is  to  be  slack 
in  his  collections,  since  the  social  factor  enters  largely 
into  the  problem.  The  dealer  does  not  wish  to  incur 
the  ill  will  of  those  with  whom  he  is  in  daily  contact 
by  the  imputation  of  being  hard-hearted  and  unfeel- 
ing. He  fails  to  realize  that  close  collections  are 
his  salvation  in  business,  and  that  undue  leniency 
in  this  regard  will  inevitably  bring  him  close  to  the 
ragged  edge  of  disaster.  Being  a  poor  collector,  and 
having  idle  money  locked  up  in  overstocks  that  they  can- 
not readily  convert  into  liquid  assets,  are  the  principal 
causes  of  the  inability  of  retail  dealers  promptly  to  meet 
their  obligations  to  wholesalers  and  manufacturers. 

The  psychology,  which  is  at  the  root  of  the  importance 
of  being  a  good  collector,  is  expressed  in  the  saying  of 
a  very  shrewd  business  man,  who  was  also  very  rigid 
in  his  ideas  of  right  and  wrong, — "I  want  a  remittance 
for  the  account  now  due,"  he  was  accustomed  to  write 
to  slow-paying  customers,  "because  it  is  due."  In 
effect  it  was  his  own  money  that  he  was  asking  for,  and 
save  for  inability,  there  could  be  no  valid  reason  for 
not  paying  it  back  to  him.  However,  much  as  a  slow- 
paying  merchant  may  bluff,  pretend  indignation  and 


FINANCIAL  FACTORS— CREDIT,  ETC.  107 

make  excuses,  he  knows  in  his  heart  that  he  is  wrong, 
and  that  not  paying  debts  when  due,  unless  for  absolute 
lack  of  means  to  do  so,  is  after  all  a  species  of  dis- 
honesty, however  much  custom  may  gloss  over  the 
fact.  Being  slow  pay  is  a  habit,  easily  gotten  into, 
but  fatal  in  its  final  effects. 

The  story  of  accounting  is  a  short  one  in  its  direct 
relation  to  merchandising.  One  of  its  phases  is  that 
of  showing  the  cost  of  doing  business  not  only  as  a  whole, 
but  also  as  relates  to  the  separate  divisions  of  each 
business  organization.  In  a  large  wholesale  house, 
this  should  be  known,  unless  this  knowledge  involves 
too  much  labor  and  expense,  and  whether  the  different 
departments  are  profitable,  and  if  not  what  is  the  reason. 
The  larger  the  house,  the  easier  it  is  for  leaks  and  use- 
less expenses  long  to  escape  detection.  If,  for  instance, 
in  a  hardware  jobber's  organization  it  be  found  that 
the  cutlery  department  is  very  profitable  and  that  the 
sporting  goods  department  is  not,  then  the  reason  for 
the  failure  of  the  latter  department  to  contribute  its 
share  of  profit  towards  the  general  welfare  should  be 
the  subject  of  searching  investigation.  It  may  develop 
that  the  causes  can  be  remedied  when  once  found. 
Such  an  investigation  may  bring  to  light  a  lack  of  suf- 
ficient gross  profit  in  some  leading  lines,  or  an  undue 


io8  MERCHANDISING 

selling  expense  in  others,  or  lack  of  close  enough  buying 
in  the  matter  of  obtaining  low  prices  from  the  man- 
ufacturers, or  a  failure  to  turn  the  stock  over  properly. 
It  may  also  be  found  that  the  causes  of  the  lack  of 
profit  in  this  particular  department  are  due  to  peculiar 
conditions  in  the  trade,  which  it  is  not  possible  to  rem- 
edy. Yet  it  may  wisely  be  concluded  to  continue 
the  department  as  it  stands,  because  its  effect  in  adding 
to  the  necessary  volume  of  business,  and  in  bringing 
business  to  the  house  in  the  resultant  sale  of  goods  of 
profitable  departments,  more  than  compensates  for 
its  own  lack  of  profit.  But  these  facts  should  first  be 
known,  so  that  whatever  action  is  taken  shall  be  with 
an  intelligent  knowledge  of  the  situation,  and  not  on 
mere  conjecture  and  estimates,  as  is  too  often  the  case. 

It  is  one  of  the  wonders  of  commercial  life  how  cer- 
tain theories  and  beliefs  are  universally  accepted  as 
beyond  question  until  some  analytical  mind  shows 
them  to  be  in  direct  opposition  to  the  actual  facts  of 
the  situation.  This  peculiarity  of  unthinking  cre- 
dulity arises  largely  from  the  universal  human  trait 
which  avoids  facing  basic  facts,  preferring  rather  to 
live  in  a  FooPs  Paradise. 

Accounting  also  may  be  easily  and  profitably  applied 
to  the  examination  of  the  profitableness  or  unprofitable- 


FINANCIAL  FACTORS— CREDIT,  ETC.  109 

ness  of  certain  lines  of  goods,  and  the  reasons  for  such 
conditions.  Yet  again  it  may  be  wisely  concluded  that 
it  is  necessary  to  carry  certain  lines  because  of  the  great 
demand  for  them,  and  the  fact  of  being  able  to  supply 
them  means  usually  the  consequent  sales  of  other  goods 
of  a  more  profitable  nature.  Horse  shoes  in  the  hard- 
ware business,  and  sugar  in  the  grocery  business  are 
typical  examples  of  such  lines. 

The  extent  and  variety  of  accounting  depends  largely 
upon  the  size  of  the  organization.  Large  wholesale 
houses  are  apt  to  have  records  and  statistics  on  many 
goods  and  processes  of  which  no  use  whatever  is  made, 
and  consequently  such  accounting  is  mere  wasted  time, 
labor  and  expense.  On  the  other  hand,  small  retail 
dealers  often  do  not  "keep  books"  save  in  a  most  prim- 
itive way,  and  also  in  a  way  that  does  not  betray  informa- 
tion to  any  one  save  the  man  who  keeps  the  books.  The 
best  rule  is  that  the  nature  and  extent  of  accounting 
shall  be  in  direct  relation  to  the  nature  and  extent  of  the 
business.  That  is  why  complicated  systems  of  double 
entry  book-keeping  are  mere  foolishness  to  the  small 
retailer  in  the  small  town,  who  only  needs  to  know  some 
few  facts  which  his  books  disclose,  but  which  he  cannot 
well  discover  from  his  own  constant  personal  contact 
with  practically  every  phase  of  his  business. 


CHAPTER  XH 

DISTRIBUTION 

As  we  have  seen  in  previous  chapters,  the  first  process 
of  merchandising  is  that  of  buying  the  needed  goods. 
Then  follows  ordering  these  goods,  taking  care  of  them 
when  received,  and  filling  orders,  which  brings  us  to  the 
question  of  distribution. 

Trade  is  generally  along  certain  geographical  lines, 
these  lines  as  a  rule  being  the  shortest  or  most  con- 
venient paths  between  the  points  of  trading.  Certain 
localities,  usually  large  cities,  become  centers  of  distribu- 
tion because  of  geographical  advantages  of  situation. 
In  the  early  days  such  advantages  were  largely  those  of 
water  transit,  either  on  a  river,  or  on  the  ocean,  or  on  a 
large  body  of  fresh  water,  such  as  the  Great  Lakes  of 
North  America.  These  various  situations  gave  the 
beginning  of  commercial  importance  to  New  York  on  a 
great  harbor,  Saint  Louis  on  a  great  river,  and  Chicago 
on  a  great  lake.  The  rapid  growth  of  railroads  profoundly 
altered  this  situation  for  the  time  being  and  made  pos- 
sible the  existence  of  distributing  centers,  such  as  In- 
dianapolis, Minneapolis  and  St.  Paul  (the  Twin  Cities), 

no 


DISTRIBUTION  in 

Denver,  Atlanta,  and  a  number  of  others,  all  of  which 
are  inland  cities  dependent  for  transportation  facilities 
entirely  upon  railroads.  To  this  there  has  been  added 
in  comparatively  recent  years  the  Interurban  Electric 
or  Trolley  lines,  which  are  doing  much  to  increase  the 
distribution  advantages  and  facilities  of  such  cities  as 
Cleveland,  Detroit,  Toledo,  Indianapolis  and  many 
others. 

With  the  growth  of  the  merchandising  policy  among 
the  retail  trade  of  carrying  small  stocks  and  turning  these 
stocks  over  often,  the  demand  from  the  retail  trade  has 
become  largely  that  of  prompt  shipment,  so  that  service 
usually  assumes  precedence  over  price  as  the  determining 
factor  in  purchases.  Formerly  the  large  cities  were  the 
principal  seats  of  the  distributer  of  merchandise  in  the 
person  of  the  jobber,  but  of  late  years  many  of  the 
smaller  cities  harbor  and  support  one  or  more  jobbing 
houses,  who  cater  to  the  nearby  trade  with  the  simple 
and  formidable  argument  of  supplying  goods  promptly, 
and  thus  render  it  possible  for  the  neighboring  retailers 
in  the  surrounding  country  to  get  along  with  small 
stocks,  frequently  replenished.  Several  ways  of  meeting 
this  competition  have  been  put  into  operation  by  the 
more  distant  and  larger  jobber  in  the  large  city.  One 
is  that  of  a  larger  and  more  complete  assortment  than 


H2  MERCHANDISING 

the  smaller  jobber  in  the  small  city  can  afford  to  carry. 
Another  is  that  which  is  known  as  direct  shipments  from 
the  factory.  A  supposititious  case  is  that  of  a  large  job- 
ber in  the  Central  West,  somewhere  on  the  Mississippi 
River,  who  arranges  with  manufacturers  in  the  state  of 
Ohio  to  ship  their  products  direct  to  his  customers  in 
Ohio.  The  salesmen  of  the  jobber  take  such  orders  in 
the  regular  way.  When  received,  they  are  forwarded 
by  the  jobber  to  the  manufacturer,  who  in  turn  ships 
them  direct  to  the  customers  of  the  jobber.  There  is 
thus  avoided  the  time  consumed  by  the  shipment  if  made 
from  the  jobber's  place  of  business,  and  there  is  saved  to 
the  retailer  the  difference  in  freight  to  his  town  from  the 
city  in  which  the  jobber  is  situated  and  the  location  of 
the  manufacturer.  It  is  obvious  that  the  advantages 
of  this  plan  to  the  retailer  consists  primarily  and  prin- 
cipally in  the  promptness  with  which  the  manufacturer 
makes  shipment,  as  compared  with  the  same  service 
shown  by  some  "local"  jobber  in  the  state  of  Ohio. 

Another  plan  is  that  of  "collective  car  loads."  Let 
us  assume  a  case  of  a  large  jobbing  house  in  a  large  city, 
somewhere  in  the  Central  West,  which  wishes  to  sell 
stoves  and  stove  furnishings  to  a  number  of  the  retail 
trade  adjacent  to  one  of  the  large  cities  in  Texas.  Orders 
are  taken  by  the  salesmen  of  the  jobbing  house  in  ques- 


DISTRIBUTION  113 

tion  from  the  different  retail  customers  in  the  section  of 
Texas  under  consideration.  When  these  orders  have 
accumulated  enough  tonnage  to  fill  a  car,  a  "collective 
car"  of  all  the  orders  is  shipped  to  the  large  Texas  city. 
When  the  car  reaches  its  destination,  bulk  is  broken, 
and  the  different  lots  for  the  different  customers  are 
shipped  locally  in  "less  than  car  load  lots"  to  their 
various  destinations.  The  advantages  are  that  the  full 
collective  car  goes  through  much  more  quickly  and  with 
less  likelihood  of  damage  to  the  goods  while  in  transit 
than  if  shipped  in  local  or  less  than  car  load  lots.  The 
theory  further  is  that  if  the  Texas  retailer  bought  from 
the  nearby  Texas  city  under  consideration,  that  the 
Texas  jobber  would  have  to  pay  the  freight  from  the 
factory  to  his  place  of  business  in  car  lots,  and  that  nec- 
essarily he  would  add  this  freight  to  his  price  to  the 
Texas  retailer,  so  that  in  effect  when  the  Texas  retailer 
buys  from  the  jobber  in  the  Central  West  he  purchases 
the  goods  F.  O.  B.  (free  on  board)  at  the  place  of  business 
of  the  jobber  of  the  Central  West.  But  although  he 
pays  the  freight  to  the  Texas  city  in  the  first  place  on 
such  purchases,  he  only  does  what  in  another  form  he 
would  do  in  case  he  bought  the  goods  from  the  Texas 
jobber. 
Now  it  would  seem  that  these  various  methods  of 


114  MERCHANDISING 

doing  business  between  the  jobbers  and  their  customers 
are  very  complicated  and  expensive,  and  have  a  tendency 
to  advance  the  price  of  goods  to  the  ultimate  consumer, 
because  of  the  constant  duplication  of  effort  in  selling 
and  buying.  These  same  retailers  in  Texas  may  be 
visited  by  the  salesmen  from  twenty-five  or  more  jobbing 
houses  situated  in  all  parts  of  the  country.  It  would 
seem  much  simpler  to  divide  the  country  into  geograph- 
ical divisions,  according  to  the  advantages  possessed  by 
certain  distributing  centers.  For  instance,  a  certain 
portion  of  the  state  of  Colorado  might  arbitrarily  be 
alloted  to  Denver  as  a  distributing  center,  while  Salt 
Lake  City  might  assume  charge  of  much  of  Utah  and 
some  portions  of  Wyoming.  Chicago  might  take  cer- 
tain sections  of  the  Central  West  and  Northwest,  and 
Saint  Louis  other  parts  of  the  Central  West,  along  with 
some  sections  of  the  Southwest — an  arrangement  in 
fact  after  the  fashion  of  the  various  Federal  Reserve 
Bank  divisions.  It  would  appear,  therefore,  quite  logical 
under  such  an  arrangement  that  many  of  the  expenses 
of  innumerable  competitors,  covering  the  same  territory 
in  their  efforts  to  obtain  trade,  could  thus  be  eliminated, 
and  that  the  retail  dealers  and  the  consumers  would  get 
the  benefit  of  these  economies  in  the  shape  of  lower 
prices  of  commodities.  But  there  are  many  things  that 


DISTRIBUTION  115 

are  logical  in  text-books  and  in  theory  that  are  not  so  in 
actual  life,  and  that  are  quite  impossible  of  realization. 
The  problem  goes  deeper  than  logic  and  economic  theory, 
however  unanswerable  on  paper  the  latter  may  appear. 
The  story  of  American  history  is  the  story  of  progress,  be- 
cause of  individuality  and  the  seizure  of  opportunity  by 
the  many.  To  crib,  cabin  and  confine  the  energies  which 
sought  to  find  vent  in  mutual  and  constant  competition 
with  each  other  is  a  thing  impossible  under  present  con- 
ditions of  American  society. 

Only  so  recently  as  the  early  days  of  this  century  this 
plan  was  definitely  and  industriously  sought  to  be  ap- 
plied in  the  shape  of  great  consolidations  of  manufacturing 
and  mining  interests,  whose  principal  claim  to  existence 
were  more  efficient  and  economical  methods  of  manu- 
facture and  distribution.  In  many  instances  they  made 
good  as  to  economies  and  efficiency  of  manufacture, 
but  failed  utterly  as  to  the  same  results  in  distribution. 
The  net  results  as  a  whole  were  an  enhancement  and 
not  a  decrease  of  prices  to  distributers  and  to  consumers. 
Moreover,  the  success  of  these  consolidations  incited 
other  groups  to  consolidate,  thus  creating  more  competi- 
tion than  they  destroyed  so  that  the  matter  of  wide- 
spread competition  remains  much  as  before. 

It  is  perfectly  possible  and  easily  thinkable  that  the 


n6  MERCHANDISING 

growth  of  population  in  this  country,  especially  in  the 
large  cities,  may  bring  about  a  state  of  society  where 
in  many  walks  of  life  collectivism  may  be  the  dominant 
factor  instead  of  individualism.  But  there  is  nothing 
at  present  in  sight  to  warrant  the  belief  that  this  is  likely 
to  come  about  in  distributing  circles  in  the  near  future. 
The  conflict  of  the  various  systems  and  units  of  distri- 
bution has  brought  about  and  spread  a  spirit  of  cosmopol- 
itanism, which  could  not  obtain  were  the  local  dealers  de- 
pendent entirely  for  their  supplies  upon  the  local  jobbers. 
Competition,  of  the  keenest  nature,  spurs  the  efforts  of 
both  the  more  distant  and  the  local  jobber.  Both  have 
the  incentive  of  a  constant  commercial  warfare,  which 
makes  them  more  observant  of  the  wants  of  the  customers 
and  of  their  own  methods  of  business,  and  there  does 
not  seem  to  be  any  reasonable  doubt  but  that  the  retail 
dealers  profit  more,  both  in  service  and  prices,  by  this 
ceaseless  competition  between  the  jobbers,  than  if  they 
were  dependent  solely  on  one  source  of  supply.  It  is  the 
story  of  human  nature  that  when  it  has  a  monopoly  on 
anything,  it  becomes  indifferent  to  the  wants  of  those 
whom  it  should  serve,  and  finally  looks  only  to  its  pre- 
ferment, regardless  alike  both  of  its  duties  and  obli- 
gations. That  both  classes  of  jobbers,  local  and  more 
distant,  have  thriven  and  prospered  under  this  competi- 


DISTRIBUTION  117 

tion,  is  due  not  to  undue  and  excessive  profits,  but  to 
improved  methods  of  business,  which  this  commercial 
warfare  made  necessary  to  their  very  existence.  What- 
ever the  faults  and  sins  of  competition,  there  remains 
no  substitute  for  its  incentive  and  progressive  spirit  in 
business,  unless  mayhap  that  of  cooperation,  of  whose 
merits  we  know  but  little  in  an  age  of  Individualism. 
In  the  retail  trade  where  the  consumer  is  dealt  with 
directly,  the  problem  of  distribution  still  demands  the 
prime  attribute  of  service.  This  is  shown  by  the  delivery, 
to  the  houses  of  the  householders,  of  the  smallest  pack- 
ages, of  orders  given  over  the  telephone  instead  of  in 
person,  of  deliveries  to  suburban  customers  by  the  great 
department  stores,  of  shopping  done  by  mail,  and  of 
every  possible  form  and  method  of  convenience  made 
easy  to  the  consuming  public.  All  this  convenience 
costs  and  is  added  to  the  price  of  the  goods  in  some  form 
and  fashion.  This  it  must  be  remembered  is  a  general 
statement,  which  like  all  such  generalizations  is  subject 
to  some  striking  exceptions.  The  competition  between 
the  great  department  stores  is  such  that  as  an  added 
incentive  to  "draw  trade,"  all  the  ways  and  means  of 
buying  are  made  easy  to  the  consumer,  and  often  with- 
out any  additional  charge,  because  that  would  entirely 
mar  the  effect  of  the  effort  to  get  additional  customers. 


n8  MERCHANDISING 

The  store  in  such  cases  seeks  to  recompense  itself  for 
the  added  expense  by  an  increase  in  the  volume  of  busi- 
ness done,  or  else  absorbs  the  new  cost  in  its  "overhead," 
as  a  part  of  a  general  expense  that  inevitably  grows  year 
by  year.  Moreover,  the  temper  of  the  trading  public  is 
such  that  it  constantly  demands — and  gets — more  in  the 
way  of  convenience,  comfort,  and  amusement  for  the 
same  price  than  it  formerly  paid  for  matters  of  less  com- 
fort and  less  ease.  In  discussing  this  phase  of  distribu- 
tion, the  mere  theorist,  safe  from  the  daily  contact  with 
the  hurly-burly  of  the  workyday  world,  insists  upon  a 
return  to  a  simpler  life,  as  the  only  solution  of  this  phase 
of  the  problem  of  distribution.  The  housewife  must 
come  and  select  her  purchase  for  herself,  instead  of  using 
the  telephone,  and  must  take  it  home  with  her  instead 
of  having  it  delivered.  Undeniably  and  logically  she 
should,  but  she  will  not,  and  that  is  all  there  is  to  it. 
This  easy,  but  impossible  solution,  runs  counter  first  of  all 
to  the  spirit  and  psychology  of  the  times.  The  present 
method  is  one  of  the  many  advantages  of  the  age  in  which 
we  live,  and  makes  more  leisure  and  freedom  from  hard 
drudgery  possible,  because  of  its  many  mechanical  ap- 
pliances and  labor-saving  inventions.  The  woman  of 
the  household  sees  in  the  telephone  and  the  delivery 
wagon  a  release  from  ceaseless  drudgery  and  also  realizes 


DISTRIBUTION  119 

the  consequent  broadening  of  her  mental  horizon,  because 
of  some  spare  time  to  devote  to  things  better  than  house- 
hold work,  which  most  women  dislike  so  far  as  any  plea- 
sure to  be  derived  from  it  is  concerned,  and  gladly  escape 
when  opportunity  and  their  sense  of  duty  permits.  With 
woman  much  of  this  labor  is  after  the  fashion  of  Pooh  Bah 
in  the  Mikado:  "I  do  it,  but  it  revolts  me."  This,  too, 
despite  much  sentimentality  that  mere  man  has  written 
to  the  contrary.  To  ask  woman  to  abandon  all  these 
means  and  methods  which  enable  her  to  devote  at  least 
some  of  her  time  to  matters  of  more  interest  and  more 
pleasure  is  to  run  counter  to  the  general  spirit  of  the 
times,  and  furthermore  to  seek  to  perpetuate  ways  that 
are  out  of  date. 

The  experiment  of  marketing  by  direct  contact  be- 
tween the  farmer  and  truck  gardener  and  the  house- 
keeper is  now  on  trial  in  many  great  cities.  It  has  in 
most  cases  been  apparently  successful,  but  the  prime 
difficulty  is  that  its  effect  is  necessarily  partial,  for  the 
multitudinous  many  still  go  on  as  before.  It  will  be  re- 
membered that  just  before  the  coming  of  the  Parcel  Post 
it  was  heralded  as  a  means  whereby  the  farmer  should 
directly  contribute  to  the  breakfast  and  the  dinner  table 
in  the  city.  But  little  came  of  this  phase  of  its  usefulness, 
because  the  ways  of  purchase,  sale,  credit  and  remit- 


120  MERCHANDISING 

tance  are  not  easily  compassed  by  so  simple  an  expedient. 
On  the  other  hand,  certain  large  distributers,  in  some 
great  cities,  some  of  whom  include  manufacturing  as  a 
part  of  their  equipment,  have  made  a  pronounced  suc- 
cess of  dealing  direct  with  the  consumer,  especially  on  the 
farm  and  in  the  small  town.  They  seek  in  effect  to  elim- 
inate one  and  sometimes  two  factors  in  the  chain  of  distri- 
bution, namely,  the  jobber  and  the  retailer.  To  do  this 
requires  an  elaborate  system  of  catalogues,  much  ad- 
vertising, and  much  machinery  of  system  and  method. 
It  is  very  doubtful  whether  after  all  the  increase  in  price 
in  the  usual  chain  of  distribution  from  manufacturer  to 
jobber  to  retailer  to  consumer  has  in  any  way  been  les- 
sened by  this  plan.  The  facts  are  that  both  methods — 
diametrically  opposite  in  purpose  and  method — continue 
to  thrive  side  by  side.  This  is  not  a  new  phenomenon, 
but  one  occurring  so  constantly  in  economic  life  as  to 
create  a  well-founded  belief  that  economic  ways  are 
largely  empirical,  and  rather  the  creation  of  happy  op- 
portunism than  of  immutable  laws. 

The  real  objection  to  the  system,  whose  logical  effect 
is  to  eliminate  the  retailer,  goes  deeper  than  the  mere 
cost  of  distribution,  for  it  strikes  at  the  life  of  the  coun- 
try town.  The  great  city  has  ever  been  the  problem  of 
every  civilization  from  the  days  of  Babylon,  Nineveh 


DISTRIBUTION  121 

and  Rome  unto  our  own  times.  The  decadence  and 
decay  of  the  great  capital  marked  the  ruin  of  the  civiliza- 
tion which  it  typified.  Whether  we  shall  repeat  the  story 
of  the  past  depends  not  so  much  upon  the  saving  grace 
which  may  be  manifest  in  the  great  center,  despite  the 
apparently  inherent  evils  which  mark  and  accompany 
its  progress,  as  upon  the  independence  and  wholesome- 
ness  of  the  world  outside.  We  are  familiar  with  the 
growth  of  urban  life  and  population  at  the  expense  of 
the  countryside,  and  with  the  resultant  evils  which  still 
give  us  grave  concern.  So  an  economic  tendency,  which 
seeks  to  destroy  the  life  of  the  small  town,  is  far  more 
serious  than  the  question  whether  the  rural  consumer 
can  or  cannot  buy  more  cheaply  because  of  this  system 
than  through  the  medium  of  the  hitherto  prevailing 
methods  of  distribution.  The  average  small  town  or 
city,  save  where  it  has  some  local  industry,  such  as 
mining,  manufacturing  or  the  like,  usually  subsists 
principally  upon  the  trade  of  the  nearby  farming  commu- 
nity. It  buys  and  markets  much  of  the  minor  products 
of  the  farm,  and  affords  the  farmer  a  shipping  point  for 
all  his  products.  Of  late  years  it  has  become  the  center 
of  social,  educational,  religious  and  economic  life  to  all 
the  surrounding  country.  It  now  offers  public  libraries, 
places  of  amusement,  high  schools,  and  junior  colleges  to 


122  MERCHANDISING 

all  the  dwellers  on  the  countryside.  These  things  which 
make  life  worth  while  have  now  become  of  easy  access 
to  the  farming  community  because  of  good  roads  and 
automobiles.  There  is  no  longer  that  same  desire  to  leave 
the  farm  and  seek  the  advantages  and  opportunities  of 
the  great  city,  which  once  robbed  the  farm  and  the  small 
town  of  its  most  enterprising  and  adventurous  spirit. 
Life  on  the  farm  has  been  freed  of  that  loneliness  and 
monotonous  drudgery  which  caused  so  many  to  flee  away 
from  it.  The  newly  awakened  spirit  of  local  pride  in 
the  small  town  is  making  it  a  place  of  attractiveness  to 
all  the  dwellers  round  about  it.  Means  of  communica- 
tion are  now  so  speedy  and  reliable  that  it  offers  much 
in  the  way  of  advancement  and  enlightenment  that  its 
isolation  formerly  denied  it.  The  people  of  the  town 
seek  the  friendship  and  companionship  of  their  farmer 
neighbors,  thus  breaking  down  that  invisible  line  which 
formerly  separated  town  and  country.  If  the  farmer 
is  to  trade  with  the  distributing  concern  in  the  distant 
city,  then  the  small  city  and  town,  largely' dependent 
upon  the  farmer  trade  for  its  support,  must  decay  and 
become  of  small  import  and  moment  in  the  country's 
civilization.  The  inevitable  effect  is  to  retrograde  life 
in  the  country  back  to  a  condition  of  loneliness  and  un- 
attractiveness,  such  as  it  has  not  known  for  many  genera- 


DISTRIBUTION  123 

tions.    This  is  an  impossible  picture,  and  yet  at  one  time 
it  seemed  likely  of  realization. 

One  of  the  most  directly  practical  factors  in  dis- 
tribution is  the  extent  of  what  is  known  as  the  "  trade 
territory "  of  any  distributing  center,  or  that  portion 
of  the  country  in  which  a  distributing  center  naturally 
sells  goods,  because  of  the  advantages  of  quick  and 
efficient  transportation,  and  the  natural  bonds  of  sym- 
pathy and  understanding  between  the  people  in  the 
distributing  center  and  those  whom  it  seeks  to  serve. 
Freight  rates  play  an  important  part  in  this  matter, 
regardless  often  of  the  comparative  distances  from  two 
competing  distribution  centers  to  the  territory  in  which 
they  desire  to  sell  goods.  The  distributing  center, 
which  has  the  lowest  freight  rates  and  the  quickest 
means  of  transportation  to  the  desired  points  has  of 
course  an  initial  advantage.  The  majority  of  dis- 
tributers in  any  large  city  are  apt  to  be  content  to  con- 
fine their  activities  and  endeavors  only  to  what  is  gen- 
erally termed  their  natural  trade  territory,  by  which 
is  meant  that  section  of  the  country  which  it  reaches 
most  promptly  and  effectively  through  its  transpor- 
tation lines,  so  that  it  can  deliver  goods  in  that  par- 
ticular territory  to  better  advantage  than  most  of  its 
rivals.  Chicago,  for  instance,  expects  to  get  the  trade 


124  MERCHANDISING 

of  certain  sections  in  the  West  and  Northwest  on  this 
basis,  while  St.  Louis  looks  to  certain  portions  of  the 
West  and  Southwest  for  the  trade  to  be  her  own  pecu- 
liar province.  Yet  the  enterprising  jobbers  do  not  con- 
fine their  operations  to  any  such  conventional  limits. 
They  demonstrate  by  means  of  prompt  shipments,  by 
large  and  well-chosen  assortments,  by  the  employment 
of  good  salesmen,  and  by  persistent  advertising,  that  they 
can  practically  sell  a  sufficient  quantity  of  goods  which 
they  carry  to  make  such  trade  profitable.  There  are 
a  few  enterprising  jobbers  in  certain  distributing  centers 
who  sell  and  distribute  the  goods  all  over  the  United 
States  by  the  means  which  have  been  enumerated. 

The  essential  problem  of  distribution  is  to  bring  pro- 
ducers and  consumers  in  as  close  business  contact  as 
possible,  and  thus  diminish  the  cost  to  the  consumer  by 
removing  the  expensive  operation  of  having  the  goods  pass 
through  the  hands  of  the  middleman.  Yet  after  all  is 
said,  such  solution  makes  slow  progress  because  of  the 
stubborn  fact  that  while  the  generally  prevailing  sys- 
tem of  distribution  is  admittedly  expensive  and  in- 
efficient, it  still  perseveres  because  no  better  way  has 
as  yet  been  found.  The  analogy  of  trial  by  jury  is  much 
the  same  story.  It  is  a  very  faulty  legal  procedure  of 
law,  but  no  one  has  yet  suggested  a  better  method* 


DISTRIBUTION  125 

The  usual  mistake  is  to  seek  solution  of  the  problem 
along  general  lines,  when  each  line  of  business  offers 
a  distinct  and  different  difficulty.  The  nearest  ap- 
proach to  a  generalization  probably  is  found  in  the 
statement  that  simple,  elemental  goods,  without  too 
much  complexity  of  assortment,  lend  themselves  most 
readily  to  closer  contacts  between  producer  and  con- 
sumer. The  difficulty  increases  with  the  complexity 
of  the  line  and  the  variety  of  assortment.  A  retailer 
who  handles  only  one  or  two  simple  lines  or  articles 
has  a  much  better  opportunity  of  advantageously  buy- 
ing direct  from  the  factory  and  thus  eliminating  the 
jobber,  than  who  handles  a  great  variety,  none  of  them 
of  any  great  moment.  An  extreme  case  will  bring  out 
this  latter  phase  more  clearly.  A  retail  hardware  dealer 
in  far  Southwestern  Texas  has  a  stock  of  goods  of  about 
$10,000.00  in  value,  and  this  stock  is  made  of  several 
thousand  articles,  very  few  of  which  he  buys  in  any 
quantity.  He  finds  that  he  needs  about  one  dozen 
items,  each  made  by  a  different  manufacturer,  and 
none  of  these  items  of  sufficient  quantity  to  make  enough 
weight  for  a  freight  shipment,  and  it  is  much  too  ex- 
pensive to  have  them  come  by  express.  Moreover, 
the  manufacturers  of  these  needed  items  are  distant — all 
the  way  from  Central  West  to  New  England,  The 


126  MERCHANDISING 

delay  in  getting  the  goods  is  too  long  to  be  considered, 
and  moreover  none  of  the  manufacturers  could  afford 
to  sell  the  retailers  such  small  orders,  as  their  credit 
and  selling  forces  are  necessarily  constructed  upon 
the  plan  of  selling  large  quantities  of  goods  to  com- 
paratively few  merchants,  and  these  few  buy  in  large 
quantities.  So  the  retailer  in  question  finds  that  the 
most  economical  thing  he  can  do  is  to  send  an  order  for 
the  entire  lot  of  goods  to  the  jobber,  with  whom  he 
trades  and  who  carries  all  of  the  items  in  stock  and  can 
ship  promptly. 

The  jobber  in  all  lines  of  business  still  continues  to 
grow  and  to  enlarge  his  bounds,  because  he  is  an  economic 
necessity,  and  a  needed  cog  in  the  machinery  of  distri- 
bution. We  must  remember  likewise  that  distribution 
methods  suited  to  the  smaller  countries  of  Europe  are 
not  suited  to  us,  not  only  because  of  the  great  extent 
of  our  country,  but  likewise  because  of  the  difference 
in  the  temperament  of  our  people.  Theoretically  con- 
solidation of  competing  interests,  and  centralization  of 
manufacturing  and  distribution,  thus  eliminating  the 
supposedly  useless  units  and  middleman,  is  best  for  the 
race,  because  it  supposedly  reduces  the  price  of  com- 
modities to  the  consumer.  In  actual  practice  it  often 
does  exactly  the  reverse. 


DISTRIBUTION  127 

But  there  is  another  and  sinister  side  to  it.  No  form 
of  civilization  has  yet  been  devised  which  can  make  a 
great  people  out  of  a  nation  of  employees.  The  small 
and  numerous  employers  are  better  for  the  country 
than  if  they  were  workers  in  great  central  factories. 
Ownership  of  some  form  invariably  breeds  responsibility 
and  such  forethought  as  is  needed  to  make  haste  slowly. 
The  hysteria  of  the  people  of  a  great  city  of  many  em- 
ployees is  often  in  strong  contrast  with  the  sober  sense 
and  sanity  of  the  owner  dwellers  in  the  country.  The 
economic  problems  of  the  day  are  largely  social,  for 
the  real  products  of  democracy  are  intelligent  men 
and  women  and  not  cheaper  methods  of  distribution 
at  the  expense  of  matters  far  more  vital. 


CHAPTER  XIII 

ADVERTISING 

The  nature  and  function  of  advertising  are  too  com- 
prehensive to-be  treated  in  a  single  chapter,  especially 
as  we  are  concerned  only  with  that  phase  of  advertising 
which  relates  to  merchandising.  We  must  have  some 
understanding,  however,  of  the  real  purpose  of  ad- 
vertising if  we  are  to  comprehend  intelligently  what 
bearing  it  has  upon  the  various  policies  of  merchandising. 

Advertising  is  in  effect  a  separate  business  in  itself, 
of  extraordinary  complexity,  and  of  equally  extraordinary 
possibilities.  These  possibilities  are  only  now  beginning 
to  be  perceived,  although  as  a  business  it  was  nothing 
new  to  many  past  generations,  yet  only  now  are  we 
getting  some  glimpse  of  its  real  nature. 

For  a  long  time  success  in  advertising  was  supposed 
to  be  the  result  of  happy  accident  or  opportunism,  as 
might  be  illustrated  by  some  catchy  phrase,  or  the  in- 
vention or  adoption  of  some  word  or  slogan,  which  at  once 
caught  the  popular  eye  and  fancy.  There  were  enough 
successes  of  this  nature  to  encourage  the  belief  that 

such  methods  were  the  head  and  front  of  advertising, 

128 


ADVERTISING  129 

with  the  natural  result  of  the  business  being  much  in- 
fluenced in  the  distant  past  by  a  set  of  adventurers 
who  depended  upon  their  effrontery  and  juggling  with 
the  quips  and  quirks  and  wanton  wiles  of  the  English 
language  in  their  gambles  at  getting  business  and  making 
a  success  of  their  ventures.  Obviously  the  ethics  of  a 
business,  much  of  which  was  done  after  this  fashion, 
was  of  a  kind  which  incurred  the  disdain  and  reprobation 
of  the  most  potent,  grave  and  reverend  seignors  in  the 
higher  world  of  commercial  life. 

As  time  went  on  apace,  it  began  to  be  seen  and  re- 
alized by  those  enterprising  spirits  in  the  advertising 
business,  who  had  some  vision  as  to  the  real  nature  and 
possibilities  of  their  calling,  that  advertising  was  a  great 
and  serious  affair,  worthy  of  the  utmost  study,  because 
its  chief  function  was  a  knowledge  of  human  nature. 
Its  primary  purpose  is  to  catch  the  attention  of  the  party 
whom  it  seeks  to  interest,  and  to  have  and  hold  that  at- 
tention when  once  secured.  Obviously,  therefore,  it 
involves  a  study  of  the  psychology  of  human  nature  as 
to  how  it  shall  achieve  this  result.  All  printed  advertis- 
ing must  not  only  catch  the  eye,  but  likewise  the  in- 
terest of  the  human  unit  to  whom  the  "ad"  is  directed. 
Its  principal  need,  therefore,  is  a  knowledge  of  the  Eng- 
lish language  and  how  it  shall  be  applied,  and  this  is  the 


130  MERCHANDISING 

one  point  on  which  most  of  its  followers  signally  fail. 
So  signally,  in  fact,  that  it  is  probably  a  true  estimate 
that  nearly  75%  of  the  money  spent  in  advertising 
is  merely  wasted,  since  it  fails  to  bring  adequate  results. 
One  has  only  to  read  carefully  the  advertisements 
which  cumber  the  pages  of  magazines,  periodicals 
and  newspapers  to  realize  how  futile,  badly  constructed 
and  ineffective  many  of  them  are.  The  trouble  is 
that  the  people  who  write  most  of  them  have  neither 
the  needed  education  nor  the  needed  training  to  present 
a  story  in  a  few  attractive  words,  which  of  course  is  the 
supreme  test  of  such  work. 

The  once  popular  idea  that  there  was  a  knack,  or  a 
trick,  or  something  mysterious  about  advertising  still  per- 
severes to  a  large  extent,  when  in  sober  truth  it  is  a  busi- 
ness where  success  can  usually  be  won  only  by  patient, 
carefully  planned  and  intelligently  carried  out  methods. 
The  comparatively  few  successes  which  go  contrary  to 
these  methods  are  only  the  usual  exceptions  to  every  gen- 
eral statement.  Fortunately  there  is  a  little  human  leaven, 
constantly  growing,  until  it  shall  leaven  the  entire  mass, 
which  realizes  that  of  all  businesses,  advertising  needs 
the  most  perpetual  care  and  unfailing  and  sustained 
sober  thought. 

The  aim  of  advertising  in  connection  with  merchan- 


ADVERTISING  131 

dising  is  to  increase  the  sale  of  goods,  by  making  them 
familiar  to  those  who  use  them.  The  first  consideration 
is  as  to  whether  the  concern  who  does  the  advertising 
has  what  is  known  as  "an  advertising  proposition,"  else 
the  money  spent  for  advertising  is  spent  uselessly  and  to 
no  purpose. 

Let  us  suppose  an  example  to-day  of  a  large  wholesale 
jobbing  house,  which  has  what  is  known  as  a  "special 
or  private  brand"  line  of  goods  of  their  own,  as  for  in- 
stance a  line  of  edge  tools.  It  is  quite  essential  that  the 
name  or  title  of  the  brand  be  appropriate  and  easily  re- 
membered. It  must  also  be  complete  as  to  assortment 
and  represent  a  line  that  contains  all  the  tools  needed 
and  called  for.  Most  of  all  it  must  have  the  necessary 
merit,  for  genuine  merit  is  the  only]thing  which  can  be  suc- 
cessfully advertised  continuously.  There  are  instances, 
of  course,  where  the  opposite  course  has  succeeded  for 
a  time  and  all  seemed  well,  but  the  end  comes  inevitably. 
Where  merit  is  advertised  and  is  absent,  it  is  usually 
only  a  question  of  time  before  the  scheme  becomes  ex- 
posed, and  then  the  end  is  sure.  Some,  of  course,  have 
gone  into  this  "game,"  with  the  intention  of  "making  a 
quick  clean-up"  and  then  retiring.  Nowadays,  how- 
ever, such  methods  come  under  the  ban  of  the  law. 

The  line  of  supposititious  edge  tools  must  also  have 


I3  2  MERCHANDISING 

sufficient  sale  and  be  widespread  enough  in  their  use, 
so  that  the  volume  of  their  business  warrants  the  ex- 
penditure of  the  necessary  amount  of  money  in  adver- 
tising. For  advertising  is  expensive,  and  to  succeed  in 
a  broad  way  must  be  done  liberally  or  not  at  all.  Also 
it  is  a  continuous  performance.  There  is  no  such  thing 
as  quitting  when  the  name  of  your  brand  of  edge  tools 
is  sufficiently  well  and  favorably  known  to  warrant  your 
ceasing  your  advertising  and  thereafter  enjoying  the 
benefit  of  the  money  spent  in  giving  your  brand  publicity. 
To  cease  advertising  is  painfully  to  realize  Shakespeare's 
statement,  "How  soon  we  are  forgot."  To  obtain  the 
full  measure  of  an  "advertising  proposition,"  the  owner 
of  the  brand  of  edge  tools  must  also  have  a  large  force  of 
salesmen  to  follow  up  the  advertising  campaign  with  the 
retail  customers  of  the  wholesale  house  in  question. 
Such  advertising  as  we  are  contemplating  is  directed  at 
the  consumer,  who  uses  the  edge  tools,  whether  farmer, 
carpenter,  mechanic,  or  householder.  Between  the  con- 
sumer and  the  wholesaler  there  ensues  the  retailer,  the 
final  distributer.  The  retailer  handles  such  goods  usually 
as  are  called  for  by  his  customers,  and  consequently  are 
easily  sold.  Now  it  takes  very  effective  and  long  con- 
tinued advertising  backed  up  by  much  merit  in  the 
thing  advertising  to  induce  the  majority  of  consumers  to 


ADVERTISING  133 

call  for  the  thing  advertised,  though  there  is  a  general 
impression  that  advertising  alone  can  create  a  satisfactory 
demand  for  certain  articles.  This  is  rarely  so,  for  there 
must  be  other  factors  to  make  this  demand  of  widespread 
and  enduring  nature.  Some  consumers,  probably  many, 
call  for  goods,  with  whose  desirability  they  have  been  im- 
pressed by  advertising.  But  the  principal  effect  upon 
other  consumers  is  to  make  them  become  familiar  with 
the  goods  advertised  so  that  they  give  them  favorable 
consideration  when  brought  to  their  attention.  And  this 
is  where  the  retail  dealer  comes  in.  He  can  do  so  much 
to  help  the  sale  of  an  advertised  article  by  presenting  it  to 
his  customers  with  his  recommendation,  or,  on  the  other 
hand,  he  can  sometimes  temporarily  hinder  the  purpose 
of  advertising  by  throwing  cold  water  on  the  merits  of 
the  advertised  article  when  presented  by  his  customers, 
or  else  directing  their  attention  to  similar  articles,  with 
the  assurance  that  the  latter  are  "equally  good,"  or  even 
better  than  the  advertised  articles.  The  average  con- 
sumer in  such  cases  is  apt  to  accept  the  recommendation 
of  the  retail  dealer  as  coming  from  one  of  experience  and 
knowledge  rather  than  trust  to  his  own  unaided  judg- 
ment. A  few  unprogressive  retail  dealers  still  object  to 
being  forced  to  handle  certain  advertised  articles  on  ac- 
count of  the  volume  and  effectiveness  of  the  demand  thus 


134  MERCHANDISING 

created.  Especially  is  this  true  where  the  articles  in  ques- 
tion do  not  pay  the  dealer  a  satisfactory  profit,  as  is  not 
infrequently  the  case.  The  province,  therefore,  of  the 
salesmen  of  the  hypothetical  jobber  and  his  brand  of  edge 
tools  is  to  demonstrate  to  the  retail  dealer  that  it  is  to  his 
interest  to  "push  the  sale"  of  the  articles  under  consider- 
ation. For,  be  it  known  that  unfortunately  some  deal- 
ers and  their  clerks  are  not  salesmen  in  the  modern 
sense  of  the  word.  They  are  more  apt  contentedly  to  sup- 
ply what  the  customers  call  for  without  endeavoring 
either  to  direct  and  guide  such  wants,  or  to  increase  their 
volume.  In  other  words,  goods  are  usually  bought  of 
such  retailers  rather  than  sold  by  them,  though  this  con- 
dition is  one  that  is  steadily  improving  as  to  the  sales- 
manship of  the  dealer.  The  salesman,  therefore,  of  the 
jobber  in  question  must  seek  to  make  an  active  salesman 
of  each  retail  dealer  whom  they  call  upon. 

To  do  this  effectively,  there  must  first  be  a  satisfactory 
profit  in  the  advertised  brand  of  edge  tools  to  the  retailer. 
The  salesmen  must  then  bring  this  to  the  attention  of  the 
dealer  and  thus  enlist  his  interest  in  these  goods,  because 
of  the  profit  which  there  is  in  them  to  the  dealer.  He 
must  counsel  him  deftly  and  tactfully  to  bring  them  to 
the  attention  of  each  prospective  consuming  customer. 
This  will  be  all  the  easier,  he  can  explain,  because  the  con- 


ADVERTISING  135 

suming  public  who  use  edge  tools  are  already  familiar 
with  the  merits  and  attractive  qualities  of  these  tools 
through  the  ceaseless  advertising  campaign  which  is  be- 
ing conducted  in  behalf  of  these  tools.  He  can  encourage 
and  direct  the  dealer  to  do  local  advertising  himself 
on  behalf  of  these  tools — in  the  local  newspapers,  by 
sign  boards,  electric  light  signs,  window  displays  and  all 
the  manifold  methods  of  advertising.  The  goods  once 
being  established  in  public  favor  do  much  to  advertise 
themselves  by  the  commendation  and  good  report  of 
those  using  them.  When  this  point  is  reached  it  also  be- 
comes very  easy  to  spread  the  effect  and  benefit  of  such 
good  report  to  any  addition  to  the  line. 

If,  for  instance,  in  this  line  of  edge  tools  under  con- 
sideration it  is  decided  to  add  a  new  item,  say  a  cutting 
tool,  not  yet  embodied  in  the  general  assortment,  then 
it  can  be  safely  assumed  that  the  new  tool  will  at  once 
be  accepted  by  the  consuming  public  as  being  in  every- 
way as  meritorious  and  effective  as  those  with  which 
they  are  already  acquainted. 

It  is  absolutely  essential  that  the  quality  of  the  ad- 
vertised articles  be  not  only  maintained  without  dete- 
rioration, but  that  it  be  improved  whenever  possible. 
Some  owners  of  advertised  articles  have  been  foolish 
and  shortsighted  enough  to  deteriorate  the  quality  of 


136  MERCHANDISING 

their  goods,  in  order  to  decrease  cost  of  production  and 
thus  increase  their  profit,  when  once  these  goods  were 
firmly  established  in  popular  favor.  They  trusted  to 
the  good  reputation  of  their  articles  and  the  effective- 
ness of  their  advertising  to  continue  indefinitely  the 
demand  for  their  products.  And  in  so  doing  they 
leaned  upon  a  broken  reed.  For  a  time  the  mere 
momentum  of  a  good  reputation  carried  them  along. 
But  in  time  the  truth  came  out  and  the  reputa- 
tion of  the  goods  became  ruined  for  all  time,  and  the 
demand  for  them  fell  off  accordingly.  Nor  was  it  ever 
possible  for  them  to  "come  back." 

Advertising  must  be  adequate  and  proportioned 
both  in  its  extent  and  nature.  A  concern  of  limited 
local  trade  cannot  afford  to  adopt  what  is  known  as 
"national  advertising,"  but  must  confine  itself  to  local 
advertising.  Nor  can  a  concern  with  a  small  product, 
even  though  it  sell  this  product  all  over  the  country, 
afford  to  advertise  in  any  extended  way,  unless  it  is 
quite  sure  that  such  advertising  will  greatly  increase 
the  demand  for  such  products.  Moreover,  often  the 
nature  of  the  product  itself  limits  its  demand,  and  ad- 
vertising in  such  instances  must  be  on  a  moderate  scale. 
For  instance,  pocket  knives  and  scissors  are  universally 
used,  and  are  fit  subjects  for  national  advertising, 


ADVERTISING  137 

while  pencil  holders  have  a  limited  use,  which  cannot 
possibly  be  sufficiently  increased  by  any  amount  of  ad- 
vertising. National  advertising  is  usually  done  in 
magazines  and  periodicals  having  a  nation  wide  cir- 
culation, and  the  great  expense  of  such  advertising  is 
supposed  to  be  compensated  by  the  number  of  readers 
who  see  the  advertisements.  It  is  obvious,  however, 
that  there  must  be  made  evident,  commensurate  re- 
turns to  warrant  the  great  expense  thus  continuously 
incurred,  since  fugitive  advertisements  appearing  now 
and  then  cannot  produce  the  full  effect  desired.  For 
the  effect  of  advertisements  can  never  be  predicated 
in  advance,  since  it  is  an  interesting  fact  of  human 
nature  and  experience  that  the  average  man  only  sees 
the  advertisements  of  things  which  interest  him. 

The  purpose  of  advertising  has  been  stated  as  that 
of  throwing  bricks  at  a  man  until  you  finally  hit  him. 
For  persistence  is  the  soul  of  advertising,  or  as  one 
advertising  concern  has  phrased  it,  "Keeping  ever- 
lastingly at  it." 

In  local  matters  sometimes  very  good  results  are 
obtained  by  an  intensive  campaign  of  all  manner  and 
methods  of  advertising  until  supposedly  every  man, 
woman  and  child  in  the  territory  in  question  knows 
of  the  advertised  articles.  Not  only  must  advertising 


138  MERCHANDISING 

be  adequate  and  proportioned  in  extent,  but  likewise 
in  nature.  It  is  recognized  nowadays  that  most  every- 
thing offered  to  the  public  is  a  fitting  subject  for  ad- 
vertising. But  obviously  the  manner  of  advertising  a 
Symphony  Orchestra  Concert,  and  a  Vaudeville  show 
must  differ  widely.  It  is  in  the  recognition  of  this 
fact  and  how  to  treat  it  that  the  art  of  advertising  lies, 
especially  as  to  the  extent  it  calls  upon  the  skill,  in- 
telligence and  experience  of  the  advertising  man. 

There  must  be  an  adequate  recognition  and  per- 
ception of  the  different  classes  and  people  to  whom 
advertisements  are  directed  and  the  psychology  and 
environment  of  different  callings  and  professions.  The 
woman  shopper  may  be  attracted  by  a  bargain  sale, 
while  the  carpenter  and  mechanic  look  for  enduring 
quality  in  the  tools  upon  whose  use  they  depend  for 
their  living.  A  homely  but  piquant  phrase,  an  apt 
illustration,  a  pertinent  quotation,  or  a  striking  and 
original  statement,  are  apt,  however,  to  catch  the 
attention  of  most  users.  For  instance,  in  that  line  of 
edge  tools,  which  we  have  selected  as  a  typical  example, 
it  might  not  be  amiss  occasionally  to  vary  the  story  of 
their  merit  and  the  details  of  their  efficient  workman- 
ship by  such  quips  as,  "a  red  haired,  cross-eyed  girl 
has  nothing  on  these  chisels  for  temper";  "These 


ADVERTISING  139 

Pocket  Knives  are  sharper  than  a  Serpent 's  tooth"; 
"These  are  the  identical  Razors  with  which  the  Scribes 
and  Pharisees  split  hairs  in  ancient  times." 

As  stated  previously  the  purpose  of  advertising  is 
to  increase  the  demand  for  the  articles  advertised,  and 
in  such  increase  must  the  main  advantage  and  profit 
of  advertising  be  found.  It  is  not  a  good  game  arbitrarily 
to  raise  the  prices  of  advertised  articles  when  once  they 
have  become  established  in  popular  favor.  Doing  so, 
under  the  impression  that  the  public  must  have  such 
goods,  because  of  the  publicity  created  for  them  by 
advertising,  and  will  be  forced  to  pay  the  advanced 
prices,  is  usually  a  fatal  delusion.  The  public  in  such 
cases  are  quick  to  take  offense  and  to  resent  the  action 
as  an  endeavor  to  despoil  them.  The  profit  from  an 
advertised  article  must  usually  be  found  in  an  increase 
in  volume,  which  thus  makes  up  for  the  expense  of 
advertising. 


CHAPTER  XIV 

THE  HUMAN  EQUATION 

Success  in  business  in  the  earlier  stages  of  our  coun- 
try's history  usually  fell  to  the  lot  of  those  dominant 
personalities,  who  not  only  had  vision  as  to  the  future, 
but  that  much  rarer  quality  of  seizing  opportunities 
when  they  presented  themselves,  and  of  taking  fortune 
at  the  flood.  As  the  pioneer  days  passed  away,  and 
opportunity  had  to  be  created  rather  than  seized,  there 
naturally  and  inevitably  ensued  the  period  of  organiza- 
tion when  coordinated  bodies  of  men  essayed  to  supplant 
the  work  of  individual  genius.  Naturally  there  came 
to  be  placed  upon  system,  method  and  the  machinery 
of  commercial  life  an  undue  emphasis,  which  has  per- 
severed unto  our  own  day.  In  fact  so-called  scientific 
methods,  often  the  products  of  purely  theoretic  students, 
have  been  exploited  to  a  degree  that  is  often  at  the 
expense  of  common  sense  and  of  a  due  regard  for  the 
overwhehning  importance  of  the  human  equation  in 
every  phase  of  business  life. 

Systems   are  necessary   in   all   large   and   extended 

businesses  if  the  work  is  to  be  done  promptly  and  effi- 

140 


THE  HUMAN  EQUATION  141 

ciently,  but  they  are  of  small,  and  often  of  doubtful 
value  unless  controlled  and  administered  by  trained 
and  intelligent  human  beings.  The  danger  to  be  guarded 
against  in  all  systems  is  their  tendency  to  perpetuate 
themselves  in  their  original  form  as  something  sacred 
and  infallible,  and  consequently  there  is  lost  the  re- 
alization of  the  necessity  of  their  being  always  kept 
up  to  date  if  they  are  to  preserve  their  efficiency.  The 
"red  tape"  of  official  life  is  a  living  example  of  how 
expensively,  slowly,  laboriously  and  unintelligently 
systems  work  when  they  thus  become  largely  matters 
of  inheritance  and  tradition.  The  inevitable  tendency 
of  every  system  is  to  perpetuate  itself  for  the  benefit 
of  the  system  itself,  and  not  for  the  definite  and  speedy 
accomplishment  of  certain  results.  So  in  effect  every 
system,  unless  watched,  regulated,  and  revivified,  be- 
comes in  many  ways  a  handicap  and  not  a  help  to  the 
transacting  of  business. 

It  must  be  remembered  that  systems  and  mechanical 
labor-saving  inventions  are  separate  and  distinct  things, 
and  not  to  be  confounded.  Such  inventions  as  adding 
machines,  multigraphing  machines,  machines  that  open, 
seal  and  stamp  letters,  and  all  similar  appliances  have 
nothing  in  common  with  system,  but  are  merely  the  re- 
sults of  the  efforts  of  inventive  genius  to  do  away  with 


142  MERCHANDISING 

the  expense  of  unnecessary  human  labor,  to  remove 
the  chances  of  human  mistakes,  and  to  accelerate  the 
transaction  of  business.  Such  machines  are  the  in- 
evitable accompaniment  and  part  of  every  well-ordered 
system,  but  are  not  the  thing  itself. 

System  is  in  effect  the  intelligent  coordination  of  all  the 
various  phases  of  any  business,  so  as  to  produce  the  most 
economical  and  efficient  results.  As  an  example,  the  care 
of  stock  in  connection  with  selling,  buying,  and  order- 
ing must  be  always  to  the  end  that  orders  when  received 
shall  be  filled  as  completely,  promptly  and  economically 
as  possible.  To  this  end  not  only  must  all  mechanical 
labor-saving  devices  be  employed,  where  the  volume  of 
business  warrants  such  expense,  but  there  must  likewise  be 
trained  and  instructed  employers  and  employees  direct- 
ing and  carrying  out  all  the  operations.  It  is  this  latter 
phase,  which  is  the  great  problem  of  all  business  to-day. 
The  problem  is  an  individual  one,  since  the  training  and 
discipline  of  human  beings  finally  resolves  itself  into  the 
separate  instruction  of  each  unit.  To  this  end  there 
must  first  be  the  spirit  of  cooperation,  which  filters  down 
from  the  top,  since  as  Goethe  said,  "Every  institution  is 
the  lengthened  shadow  of  one  man. " 

Discipline  is  essential  in  every  organization,  and  there 
must  be  obedience  to  commands  from  those  in  charge. 


THE  HUMAN  EQUATION  143 

But  it  matters  materially  whether  or  not  that  obedience 
is  enforced  by  mere  autocratic  fiat  or  by  the  cooperative 
spirit  of  team  work.  The  discipline  and  team  work  of  a 
football  team  in  a  modern  University  is  a  case  much  in 
point.  There,  obedience  is  prompt  and  unquestioned,  but 
it  proceeds  from  voluntary  submission  of  will  to  one  whose 
intentions  and  ability  are  trusted  to  bring  about  the  vic- 
tory for  the  honor  of  the  college,  which  is  the  purpose  for 
which  the  team  is  organized.  The  relations  of  employer 
and  employee  are  far  different  from  those  of  the  past  gen- 
eration. Respect  for  leadership  is  won  by  display  of  abil- 
ity and  by  democratic  bearing,  and  not  by  the  mere  ipse 
dixit  of  place  and  authority.  The  essential  thing  in  the 
success  of  any  organization  is  the  creation  of  an  esprit 
du  corps  where  each  employee  feels  a  personal  interest 
in  the  success  of  the  concern.  Such  a  spirit  can  be  cre- 
ated only  by  the  genuine  interest  of  those  who  give  orders 
in  those  who  execute  them.  As  far  as  possible,  the  suc- 
cess of  the  concern  must  in  such  measure  as  is  feasible, 
signify  some  participating  success  by  its  workers.  Only 
here  it  often  encounters  that  phase  of  human  nature, 
which  is  willing  to  share  the  benefits  of  prosperity,  but 
not  so  willing  to  bear  the  burdens  of  the  days  of  business 
depression.  The  problem  is  a  large  and  complicated  one, 
and  not  easy  of  solution.  Often  the  best  intentions  of  the 


144  MERCHANDISING 

employer  fail  of  their  purpose,  because  they  seem  to  smack 
of  charity  or  condescension,  which  is  something  few  em- 
ployees are  willing  to  accept.  All  that  the  average  worker 
asks  is  a  square  deal  and  such  opportunity  of  advance- 
ment as  may  fall  to  his  lot,  though  this  latter  statement 
is  always  subject  to  the  amendment  that  almost  every 
man  places  an  undue  value  upon  his  services  that  busi- 
ness conditions  make  it  impossible  to  recognize  in  any- 
thing like  his  reckoning. 

The  surest  way  to  bring  about  real  efficiency  in  any 
organization  and  to  create  an  interest  by  its  members  in 
their  work  is  a  definite  plan  of  educating  each  employee 
in  the  nature  and  function  of  his  work,  for  only  in  this 
way  will  the  average  employee  interest  himself  in  his  job. 
It  is  also  an  "immortal  cinch"  that  he  will  make  but 
small  progress  in  his  work  unless  he  likes  it.  Otherwise 
he  is  interested  merely  in  holding  his  job.  All  teaching 
which  is  worth  while  means  infinite  patience  and  infinite 
detail.  But  the  burden  of  this  infinite  detail  upon  the 
learner  must  be  lightened  by  an  explanation  as  to  the 
meaning  and  purpose  of  this  drudgery  of  minuteness,  so 
that  it  may  be  seen  and  realized  as  a  means  to  an  end, 
that  end  being  the  accomplishment  of  definite  and  efficient 
processes.  Only  in  this  manner  can  there  be  opened  up 
to  the  learner  the  full  meaning  and  possibilities  of  his 


THE  HUMAN  EQUATION  145 

labors,  and  the  education  thus  involved  in  his  intelligent 
prosecution  of  his  work.  For  almost  every  occupation  in 
business  life  has  such  possibilities  in  full  measure,  if  only 
the  worker  has  the  vision  to  discern  them.  In  the  chapter 
on  "Ordering"  it  was  shown  how  the  simple  and  appar- 
ently uninteresting  and  monotonous  work  of  ordering 
goods  has  almost  infinite  possibilities  of  an  education 
which  is  world  wide  in  its  scope.  Moreover,  as  enlight- 
ened self-interest  is  a  most  potent  incentive  in  human 
nature  to  action,  it  must  be  demonstrated  to  the  learner 
in  humble  station  that  by  this  process  of  learning  the 
possibilities  of  his  job,  he  is  fitting  himself  in  the  best 
possible  way  for  higher  and  more  lucrative  positions. 

There  are  to-day  a  great  many  successful  men  in  busi- 
ness in  high  positions  who  commenced  their  careers  as 
office  boys,  and  it  was  solely  because  they  were  efficient 
and  capable  office  boys  that  they  went  on  to  better  things. 
In  most  cases,  however,  their  success  was  due  to  an  in- 
born ambition  and  initiative  which  made  them  study 
their  duties  in  the  lack  of  definite  teaching  by  those 
higher  up.  For  the  ideas  of  training  employees  systemati- 
cally in  their  duties  is  largely  a  modern  conception,  and 
an  outgrowth  of  the  recognition  of  the  truth  that  educa- 
tion and  intelligence  are  business  assets  of  the  utmost 
value.  It  is  much  easier  to  make  an  efficient  employee 


146  MERCHANDISING 

out  of  a  well-educated  boy  than  of  one  who  is  only  partly 
educated,  provided  the  matter  of  individual  ability  be 
about  equal.  Only  by  persistent  training  and  education 
in  their  daily  duties,  illustrating  the  lessons  by  constant 
examples,  can  the  average  boy  or  man  be  made  to  think 
about  his  duties,  and  see  the  reason  for  the  various  acts 
that  he  daily  performs.  "Using  your  head,"  as  is  the 
common  phrase,  is  not  a  general  attribute  of  humanity, 
simply  because  it  has  never  been  made  so  by  ceaseless  ed- 
ucation. Such  consecutive  and  logical  thinking  can  be 
made  an  instinctive  impulse  in  most  workers,  by  teach- 
ing them,  line  upon  line,  precept  upon  precept,  to  ask  the 
why  and  wherefore  of  every  new  proposition  presented 
to  them,  to  endeavor  to  analyze  its  possibilities  and  its 
limitations,  so  that  they  may  intelligently  proceed  in  its 
execution.  The  bane  of  business,  and  the  cause  of  in- 
numerable and  costly  mistakes,  is  blindly  doing  things 
because  they  were  always  done  that  way,  when  the  rea- 
sons for  such  action  may  have  been  materially  changed 
or  else  entirely  disappeared. 

Always  there  should  be  encouraged  in  employees  the 
habit  of  making  suggestions  for  the  benefit  of  the  concern, 
although  no  one  should  ever  of  his  own  volition  alter  the 
manner  of  doing  anything  without  first  consulting  some 
one  in  authority.  It  is  also  the  part  of  wisdom  for  those 


THE  HUMAN  EQUATION  147 

in  authority  to  give  careful  consideration  to  all  such  sug- 
gestions, even  though  most  of  them,  as  is  usually  the  case, 
are  of  no  special  value.  There  will  be  however  usually 
enough  wheat  in  the  chaff  to  make  it  worth  while. 

The  methods  of  teaching,  that  they  may  be  effective, 
are  too  diverse  to  be  treated  in  this  chapter,  especially 
as  they  vary  much  in  different  occupations.  But  the 
teachers  must  always  be  men  of  experience,  who  them- 
selves know  the  business  and  have  patience  and  also 
human  interest  enough  to  realize  the  fruits  of  their  labor. 
We  hear  much  of  the  needs  of  efficiency  in  our  industrial 
life  in  the  future,  which  awaits  us  after  the  war.  Some- 
what mistakenly  it  has  been  supposed  that  we  must 
imitate  autocratic  methods,  which  have  been  so  strik- 
ingly exemplified  by  one  of  the  gteat  powers  of  Europe. 
No  methods  can  be  further  from  our  purpose,  or  the  hope 
of  its  accomplishment.  Between  the  ways  of  autocracy 
and  the  ways  of  democracy  there  is  a  great  gulf  fixed, 
and  the  present  war  has  shown  that  although  democracy 
be  unprepared  in  the  beginning  it  soon  learns  to  beat 
autocracy  at  its  own  game.  System  and  efficiency  in  our 
future  industrial  life  can  come  only  after  our  own  fashion 
and  our  own  native  instincts,  and  by  the  spirit  of  intel- 
ligent and  trained  cooperation  between  all  sorts  and  con- 
ditions of  men  in  commercial  life. 


INDEX 


Accounting,  101,  107,  108,  109 
Accounts,  1 06 
Activities,  commercial,  108 
Advertisement,  fugitive,  137 
Advertising,  5,  128,  129,  130,  132, 

136,  137,  138,  139 
Agriculture,  3 
Articles,  90,  91,  92,  94 
Articles,  advertising,  135 
Assortment,  in 
Astronomy,  67 
Autocracy,  147 
Automobiles,  74,  75 

Banking,  3 
Boll  weevil,  61 

Business,  85;  ethics  of,  129;  ma- 
chinery, 28, 140;  successful  man, 

i4S 

Buyer,  7,  85,  87 
Buying,   4,   6,    no;   aim   of,   9; 

goods,  57,  83;  policy,  6 
Buy  outs,  97 

Cans,  tin  fruit,  86 

Capital,  20 

Charges,  carrying,  13,  60;  express, 

95 

City,  119,  120,  121 
Classes  of  people,  138 
Climate,  103 
Cloth,  screen  wire,  71 
Collective  car  loads,  113 


Collectors,  103,  105,  106 
Competition,  ro,  in,  116 
Competitors,  85 

Concerns,  136;  mercantile,  u  * 
Consumers,  86,  132,  133 
Contract,  58 
Coordination,  142 
Cost,  percentage,  16 
Cotton,  61,  62,  63 
Credit,  102 
Credit  man,  102, 105 
Customers,  85,  92,  96,  97,  98,  102, 
103,  104,  105 

Dealer,  86,  104, 134 

Demand,  37,  49,  63,  93 

Democracy,  147 

Depreciation,  12 

Deterioration  in  quality,  37 

Discipline,  142 

Distribution,  i,  3,  5,  no,  117, 118, 

120,  123,  124;  center  of,  no, 

in,  116 

Economics,  31 
Education,  145 
Efficiency,  144,  147 
Electric  light  signs,  135 
Employee,  127, 142 
Employer,  127,  142 
English  language,  129 
Experiences,  85,  90 


149 


INDEX 


Factors,  financial,  3,  5,  93, 101 
Fishing,  3 
Freight,  95 
Futures,  77 

Geology,  67 

Goods,   76,   80,   88,  94,  95,  96; 

buying,  57,  83;  carrying  over, 

80;  close  out,  64;  handling,  80; 

holiday,  76,  79,  82;  lines,  15; 

Plow,  57,  59;  regular,  31,  47,  57; 

seasonable,  32,  57,  59,  61,  64, 

65,  72,  76;  staple,  32,  47;  steel, 

57,  72,  73 

Hammocks,  74,  75 
Hay,  70 

Hoes,  cotton,  58,  61 
Housewife,  86 
Human  equation,  5 
Human  nature,  143 

Instincts,  sanitary,  71 
Insurance,  12 
Intelligence,  145 
Investigation,  107 
Item,  loo 

Jobber,  8,  13,  22,  58,  59,  64,  77, 

78,  87,  116,  126 
Jobbing  house,  24 

Knives,    carving,    84;    corn,    69; 
pocket,  84,  136 

Leadership,  143 
Luxuries,  77 

Magazines,  130,  137 
Manufacture,  3,  8, 9,  57,  59, 77,  79 
93 


Marketing  by  direct  contract,  119 

Maximum  and  minimum  quan- 
tity,  28 

Mechanical  labor  saving  inven- 
tions, 141 

Memorandum,  96 

Merchandising,  i,  3,  6,  22,  34,  37, 
54,  80,  91,  93,  101,  119, 128, 130 

Methods,  140 

Methods,  scientific,  140 

Mining,  3 

Money,  10,  101 

Monopoly,  116 

Mosquitoes,  72 

Nails,  brass,  91 
Necessities,  77 
Newspapers,  local,  135 

Obedience,  142 

Orderer,  84,  85,  87,  89,  90 

Ordering,  4,  6,  8,  31,  34,  35,  50, 
Si,  55,  57,  64,  65,  70,  72,  79,  83, 
94, 101, 145;  department,  94 

Orders,  back,  98;  filling,  5,  70,  93; 
work,  29 

Padlocks,  87,  88 

Parcel  post,  119 

Pencil  holders,  137 

Periodicals,  137 

Perpetual  inventory,  25 

Photographs,  88 

Population,  116 

Price,  85,  86,  90;  advancing,  6,  7; 

comparative,  41;  low,  48 
Production,  4 

Profits,  19,  20, 139;  gross,  20 
Promptness,  99 


INDEX 


Psychology,  38,  76,  86,  106,  129, 

138 

Public,  138 
Purchasing  power,  81 

Records,  33,  59;  sales,  36;  system 

of,  93 

Red  tape,  141 
Reduction,  86 
Reports,  low,  26 
Retailer,  3?  61,  77, 86, 87, 109,  in, 

"7, 133,  134 

Sales,  48,  77,  86,  89,  90 

Salesmanship,  77,  83 

Salesmen,  78,  83,  84,  85,  89,  90, 

105,  132, 134 
Samples,  84,  85 
Saw,  85 
Schedule,  32 
Scissors,  136 
Scythe,  grain,  65 
Self-interest,  145 
Selling,  5,  7,  57,  83,  89,  91 
Service,  93 
Shipments,  52,  60,  95,  96;  direct, 

112 

Shortages,  26,  28,  93,  95 
Sign  boards,  135 
Simplicity,  31 


Stock,  31,  100,  101,  142;  accu- 
mulating over-stocks,  8;  care  of, 
4,  22;  clerk,  29;  entries  of,  31; 
over-stock,  101;  taking,  23; 
turn  over  of,  4,  10 

Stoves,  53,  54 

Substitutes,  96,  97 

Suggestions,  146 

System,  140, 141, 142, 147;  dual,  26 

Teaching,  147 
Terms  and  dating,  60 
Territory,  trade,  123 
Tools,  edge,  131,  132,  134 
Town,  120,  121,  122 
Transportation,  3 

Users,  86 

Using  your  head,  146 
Variety,  99 
Vaudeville,  138 

Weather,  81 

Ware,  aluminum,  50,  51;  enamel, 

37,  39,  55  J  nickel  plated,  48; 

white,  51 
Wholesaler,  3,  9,  20,  29,  34,  59,  87, 

88,  107,  109,  131, 132 
Wild  animals,  72,  73 
Window  display,  135 
Women,  41 


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History  of  Economic  Thought 

A  Critical  Account  of  the  Origin  and  Devel- 
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theoretical  and  the  so-called  "  practical,"  finds  its  justification 
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been  made.  With  this  purpose  in  mind  the  subject  matter  has 
been  grouped  under  the  following  headings :  Part  I.  The 
Nature  and  Import  of  Sociology ;  Part  II.  Social  Evolution  ; 
Part  III.  Socialization  and  Social  Control;  Part  IV.  Social 
Ideals ;  Part  V.  Social  Pathology ;  Part  VI.  Methods  of  Social 
Investigation;  Part  VII.  The  History  of  Sociology.  It  has 
been  the  endeavor  of  the  authors  to  bring  together  in  this  book 
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specting the  origin,  nature,  structure,  functions  and  abnormal 
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who  in  a  systematic  way  are  endeavoring  to  acquaint  themselves  with  the 
various  aspects  of  practical  sociology.  Much  of  the  constructive  philanthropy 
of  to-day  must  deal  directly  with  the  child,  the  improvement  of  his  conditions 
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Doing  and  Why,  is  characterized  by  the  following  features : 

1.  It  places  greater  emphasis  than  usual  on  the  work  of 
the  government. 

2.  It  pays  more  attention  to  present  problems,  espe- 
cially to  the  Public  Regulation  of  Business. 

3.  It  applies  to  every  aspect  of  government  the  test  of 
Results  —  whether  the  subject  be  the  powers  of  the  Presi- 
dent, the  election  laws,  or  the  Sherman  act  —  for  the  value 
of  a  court,  a  statute,  or  a  political  institution  should  be 
known  by  its  output. 

4.  It  depicts  the  Government  As  It  Is,  and  as  it  has 
developed.     Our  system  is  not  a  finished  crystal,  nor  an 
ancient  historical  manuscript,  but  a  growth.     And  it  is 
still  growing. 

5.  It  includes  the  interpretation  of  the  Constitution  and 
the  chief  regulative  laws,  in  the  most  recent  Decisions  of 
the  Supreme  Court.     It  is  this  that  gives  clear,  definite 
meaning  to  the  discussion  of  government  forms  and  ac- 
tivities. 

6.  It  presents  an  Ideal.     It  does  not  hesitate  to  point 
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Elementary  Principles  of  Economics 

Revised 

Cloth,  i2mo,  446  pages,  $1.10 

The  purpose  of  the  book  when  it  was  first  published  ten 
years  ago  was  to  define  a  course  in  economics  for  high  schools 
and  to  provide  a  book  suited  especially  to  the  needs  of 
such  a  course.  And  the  Ely  and  Wicker  text  has  proved 
that  it  successfully  meets  this  double  test. 

In  the  introductory  chapters  the  student  is  given  an  idea 
of  the  actual  constitution  of  industrial  society,  and  at  the 
same  time  is  led  to  regard  economic  principles  from  the 
relative  and  historical  point  of  view. 

Wherever  changes  of  theory  have  won  their  way  into 
general  acceptance  within  the  last  decade  the  new  book 
notes  the  change.  It  reflects  recent  legislation  on  economic 
and  industrial  questions,  though  the  limitations  of  size 
prevent  the  introduction  of  a  discussion  of  many  live  ques- 
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questions,  are  all  preserved  in  the  new  edition. 


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Outlines  of  Economics 

BY  RICHARD  T.  ELY,  PH.D.,  LL.D. 

Professor  of  Political  Economy  at  the  University  of  Wisconsin; 
THOMAS  S.  ADAMS,  Ph.D.,  Professor  of  Political  Economy  at  Yale 
University;  MAX  O.  LORENZ,  Associate  Statistician  of  the  Inter- 
state Commerce  Commission,  and  PROFESSOR  YOUNG  of  Cornell. 

Third  Revised  Edition,  Cloth,  8vo,  $2.25 

"It  is  a  sign  of  the  time  when  such  a  standard  and  authoritative  book 
as  this  requires  such  revision  for  its  third  edition  that  it  was  not  possible 
to  use  the  old  type.  The  chapters  on  transportation,  insurance,  social- 
ism, and  agriculture  needed  expansion  to  include  legislation.  The 
Federal  Reserve  system  demanded  a  chapter  to  itself,  and  so  did  labor 
legislation.  The  statistics  and  references  have  been  brought  down  to 
date,  and  the  book  in  general  is  more  useful  to  the  teacher,  and  more 
attractive  to  the  reader.  The  authors  are  both  open-minded  and  con- 
servative, not  condemning  new  ideas  for  their  newness  nor  yet  accepting 
them  for  the  same  reason  and  without  challenge.  The  book  is  a  useful 
antidote  to  the  economic  poisons  which  command  attention  through 
their  promises  to  the  millennium,  which  they  are  less  able  to  deliver, 
nevertheless,  than  writers,  like  these  whose  imaginations  and  benevo- 
lence are  corrected  by  their  knowledge." — New  York  Times. 

"So  far  as  the  practical  side  of  the  subjects  with  which  this  volume 
deals  is  concerned,  everything  has  been  done  by  the  authors  to  keep 
their  work  abreast  of  the  times  and  the  latest  developments  so  that  the 
readers  and  students  may  find  there  the  important  things  of  contem- 
porary record  as  well  as  the  high  lights  of  economic  history.  The  the- 
oretical side  of  economics  has  not  been  neglected  in  this  general  revision 
and  that  chapter  has  been  simplified  and  made  more  easily  compre- 
hensible to  those  first  entering  the  study  of  this  subject.  This  volume 
maintains  the  same  high  standard  it  held  at  the  time  it  was  first  pub- 
lished. It  is  one  of  the  best  books  on  this  subject." — Philadelphia  Press. 

"Anyone  who  got  his  foundations  in  political  economy  out  of  the  text- 
books of  the  last  generation  cannot  fail  to  be  struck  with  the  enormous 
range  of  subjects  covered  in  such  a  book  as  this,  compared  with  what  was 
then  included;  and  there  is  always  some  danger  that  in  the  mind  of  the  stu- 
dent this  wealth  of  material,  important  as  it  is,  may  yet  carry  with  it  the 
drawback  of  more  or  less  submerging,  the  central  truths.  In  Professor 
Ely's  book,  the  distribution  of  emphasis  as  well  as  of  space,  is  such  as 
to  reduce  this  danger." — The  Nation. 


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